Following the U.S. jobs report on Friday, the dollar strengthened against the euro. It declined slightly against the yen.
The U.S. j ob picture held steady in December, with the U.S. economy creating 252,000 jobs for the end of the year, while the unemployment rate dropped to 5.6 percent. This extends the longest run of job creation on record. The U.S. was expected to create 240,000 jobs.
The dollar index (Exchange:.DXY), which tracks the greenback against a basket of major currencies, last stood unchanged. The index hit its highest in almost a decade on Thursday.
The euro stood at around $ 1.1806, near a nine-year low of $ 1.1754 reached on Thursday and close to $ 1.1747, the level at which it began trading in January 1999.
Numbers released on Friday by the euro zone’s two biggest economies, France and Germany , only darkened the outlook for the 18-nation currency bloc. Industrial output declined in both countries and German exports fell sharply.
Also weakening the euro was concern that a January 25 Greek general election will lead to a stand-off between Berlin and Athens over austerity policies imposed on Greece as a condition of its international bailout.
“Currently, market pricing is beyond that so there’s still a lot of scope for U.S. yields to rise and for that to continue to provide support for the U.S. dollar.”
“The dollar index is likely to rise beyond the 2005 peak. But to rise well beyond the peak, we will likely need to see further widening in yield gaps (between the dollar and other currencies),” said Minori Uchida, chief FX strategist at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
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