The dollar gained versus the yen (FOREX:USDJPY) after a report showed the U.S. added more jobs last month than forecast, signaling the Federal Reserve may reduce monetary stimulus that’s seen as debasing the currency.
The greenback declined versus most of its 16 major peers even as the Labor Department reported payrolls increased by 203,000 in November, versus the median forecast in a Bloomberg News survey for a 185,000 advance. The yen weakened earlier after the head of an advisory panel called on Japan’s Government Pension Investment Fund to start cutting domestic debt holdings. The 17-nation euro fluctuated versus the dollar after European Central Bank refrained yesterday from adding to monetary stimulus.
“The latest U.S. data falls into that rare terrain that unequivocally favors an early December tapering,” Alan Ruskin, the New York-based global head of Group of 10 foreign-exchange strategy at Deutsche Bank AG, wrote in an e-mail. Markets are trading as though positioned for a strong report, “quashing the immediate positive USD impact, even if this data should provide a solid underpinning for the USD in coming weeks, notably against favorite shorts like the” yen and Canadian dollar.
The dollar rose 1 percent to 102.81 yen at 10:02 a.m. in New York. The greenback lost 0.1 percent to $1.3675 per euro. The 17-nation currency gained 1 percent to 140.63 yen.
The Bloomberg U.S. Dollar Index, which tracks the U.S. currency against 10 major counterparts, added 0.1 percent to 1,018.02.
South Africa’s rand led emerging-market currency gains against the dollar, rising 1.2 percent, after weakening earlier. Mexico’s currency rallied 1 percent versus the greenback after declining 0.2 percent earlier.
Emerging-market currencies are gaining amid a “big short- covering rally,” said Win Thin, the global head of emerging- market strategy at Brown Brothers Harriman & Co. in New York. A short is a bet that an asset’s price will fall.
“EM will still find it hard to gain traction beyond today,” Thin said. “Don’t think too many will want to load up on EM given this backdrop.”
The euro rose to a five-week high against the dollar yesterday as ECB President Mario Draghi refrained from introducing further monetary stimulus. The ECB kept its interest-rate targets unchanged and gave no indication that policy makers will introduce a negative deposit rate that would drive investors into riskier assets.