The dollar (NYBOT:DX) strengthened the most in a month as jobs gains that exceeded analyst estimates boosted speculation the Federal Reserve will bring forward the timing of interest-rate increases.
The U.S. currency rose against all but one of its 16 major peers as the prospect of higher borrowing costs set the U.S. apart from other nations that are adding to currency-debasing stimulus measures to boost growth. The krona plunged after a larger-than-expected cut in Swedish interest rates, Australia’s dollar tumbled as the Reserve Bank Governor said it was “overvalued,” and the euro fell after European Central Bank President Mario Draghi reiterated that he’ll keep rates low.
“These kind of numbers are the ones that have to get some attention even at the Fed,” said Robert Sinche, a global strategist at Stamford, Connecticut-based brokerage Pierpont Securities LLC. “It’s a well-deserved increase in the dollar although I think there’s a lot more to go.”
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, rose 0.3 percent to 1,008.34 at 10:01 a.m. New York time, the biggest advance since June 2. The greenback strengthened 0.4 percent to 102.22 yen. Europe’s 18- nation shared currency declined 0.4 percent to $1.3606.
U.S. employers added 288,000 workers in June, more than the 215,000 median forecast of 94 economists surveyed by Bloomberg. The unemployment rate dropped to an almost six-year low of 6.1 percent, from 6.3 percent.
“The number is much stronger than expected, very encouraging,” said Richard Franulovich, chief currency strategist for the northern hemisphere at Westpac Banking Corp. in New York. The dollar is likely “to rise across the board,” he said.
Treasuries declined after the jobs data, a sign traders were adding to bets on higher borrowing costs. The two-year yield rose four basis points to 0.52 percent, the highest rate since May 2011. The rate was 49 basis points higher than its German equivalent, the biggest premium since 2007.
The U.S. central bank has trimmed monthly buying to $35 billion from $85 billion last year, while holding the key borrowing rate at zero to 0.25 percent, where it’s been since 2008.
Initial jobless claims rose to 315,000 in the period ended June 28, the Labor Department reported today. The median forecast of 48 economists surveyed by Bloomberg called for 313,000 claims.