Dollar index rallies on strong U.S. employment data

Investing.com –

Investing.com – The dollar rallied against the other major currencies on Friday, after data showed that the U.S. economy added more jobs than expected last month, fuelling optimism over the strength of the local job market.

The Labor Department said the U.S. economy added 257,000 jobs in January, beating expectations for an increase of 234,000. December’s figure was revised to a 329,000 gain from a previously estimated 252,000 rise.

The report also showed that the U.S. unemployment rate ticked up to 5.7% last month, from 5.6% in December. Analysts had expected the unemployment rate to remain unchanged in January.

In addition, data showed that U.S. average hourly earnings rose 0.5% in January, exceeding expectations for a 0.3% gain, after a 0.2% fall the previous month.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 1.02% to 94.62.

EUR/USD tumbled 1.12% to 1.1349 as investors continued to focus on developments in Greece, after German Finance Minister Wolfgang Schauble said on Thursday that Greece’s financial difficulties were the result of domestic problems, but that Germany would do all in its power to help.

Schauble was speaking at a joint press conference with his Greek counterpart Yanis Varoufakis in Berlin on Thursday.

The comments came after the European Central Bank said it would no longer accept Greek bonds as collateral for lending, shifting the burden on to Greece’s central bank to provide additional liquidity for its lenders and increasing pressure on Athens.

Earlier Friday, official data showed that German industrial production rose 0.1% in December, disappointing expectations for a 0.4% gain. November’s figure was revised to a 0.1% uptick from a previously estimated 0.1% fall.

The pound was also lower against the dollar, with GBP/USD down 0.38% to 1.5268.

The Office For National Statistics said that the U.K. trade deficit widened to £10.15 billion in December from £9.28 billion in November, whose figure was revised from a previously estimated deficit of £8.85 billion. Analysts had expected the trade deficit to hit £9.10 billion in December.

Elsewhere, USD/CHF climbed 0.66% to trade at 0.9271, while USD/JPY jumped 1.25% to 119.00.

The Australian dollar remained moderately higher, with AUD/USD adding 0.28% to 0.7820, while NZD/USD slid 0.46% to 0.7374. The Aussie shrugged off a report by the Reserve Bank of Australia saying that it cut its 2015 growth forecasts to 2.75% from an initial 3%.

The Canadian dollar remained lower, with USD/CAD up 0.27% to 1.2467. Statistics Canada reported that 35,400 jobs were created last month, compared to expectations for a 5,000 gain. December’s figure was revised to a 102,100 decline from a previously estimated 4,300 fall.

Canada’s unemployment rate fell to 6.6% in January from 6.7% the previous month, the report showed, compared to expectations for the index to remain unchanged.

Data also showed that Canadian building permits 7.7% in December, more than the expected 5.0% increase. November’s figure was revised to a 13.6% drop from a previously estimated 13.8% decline.

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