Wed, July 24, 2024

U.S. Dollar Reached its Highest Point Against Euro


The U.S. dollar once more demonstrated its strength on Monday. It climbed against the main peers, reaching a four-month high versus the single currency, as traders positioned for an earlier tapering of Federal Reserve stimulus.

The U.S currency strengthened as far as $1.1742 to the euro, extending a 0.6% pop from Friday when a strong U.S jobs report stoked bets that a reduction in asset purchases could start in 2021 and higher interest rates could follow as soon as 2022.

The dollar index, which tracks the greenback against six rivals, climbed to a two-week top of 92.915. The dollar index has a chance to close above 93, while the greenback could head for $1.1704 per euro.

In addition, the dollar also reached an almost two-week high of 110.37 yen.

The greenback rallied against its Australian as well as New Zealand counterparts on Monday. It rose 0.3% to $0.7330 per Australian dollar and 0.4% to $0.6980 per kiwi.


Dollar and the U.S. economy

On Friday, the Labor Department released its nonfarm payrolls report. Nonfarm payrolls rose by 943,000 for the month while the unemployment rate fell to 5.4%. The payroll increase was the best since August of 2020. Average hourly earnings also increased more than expected in July.

The leisure and hospitality sector once again led job creation, adding 380,000 positions. Out of 380,000 positions, 253,000 came in bars as well as restaurants. The unemployment rate for leisure and hospitality declined to 9% for July from 10.9% in June. But there are still about 1.8 fewer workers than prior to the coronavirus pandemic. Salaries in the leisure and hospitality sector rose 1.2% month over month and are up 3.1% from a year earlier.

Education also reached great results in July, with 261,000 new hires. That also left private payrolls up 703,000 for the last month, about in accordance with expectations.

Professional and business services and transportation and warehousing added 60,000 and 50,000 jobs respectively. Health care, information, mining, manufacturing also added thousands of jobs.

The unemployment rate declined from the pandemic’s peak of 14.8%, nonetheless, remains well above the 3.5% before the crisis. The U.S. Federal Reserve promised to keep ultra-easy monetary policy in place until they see stronger signs of full employment.

The latest nonfarm payrolls report added to an overall positive climate for employment. Results from May’s were revised up by 31,000 to 614,000, while the June count rose 88,000 to 938,000, for a total gain of 119,000.


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