© Reuters. Dollar extends gains as Wall Street slumps
Investing.com – The U.S. dollar moved higher on Monday as the currency built on gains from Friday as a stronger than expected U.S. jobs report bolstered expectations for a faster pace of rate hikes by the Federal Reserve this year.
The , which measures the greenback’s strength against a basket of six major currencies, was up 0.30% to 89.31 by 10:28 AM ET (15:28 AM GMT).
Demand for the dollar was underpinned after data on Friday showing that U.S. hiring remained robust and average earnings rose by the most since 2009 in January.
The strong wage growth, seen as a potential precursor to a pickup in inflation underlined the case for the Fed to raise interest rates at a faster pace this year.
Fears of a return of inflation continued to fuel a selloff in equities, with on Monday. The decline in equities also drove safe haven demand for the greenback.
Expectations of tightening monetary policy tend to boost the dollar, as rising rates make the currency more attractive to yield-seeking investors, but higher borrowing costs are a negative for stocks.
The Fed left rates unchanged last week but said it anticipated inflation would likely rise in 2018, underlining expectations that borrowing costs will continue to increase. The Fed currently projects three rate hikes for this year.
The jobs report spurred a recovery in the dollar after its fell to three year lows in late January, pressured lower by a range of factors, including concerns about U.S. trade protectionism and perceptions of narrowing yield advantage.
The euro was lower against the dollar, with down 0.34% to 1.2416.
The dollar was steady against the yen, with last at 110.22. The yen tends to rise in times of market turbulence thanks to its safe haven status.
Sterling was weaker against the dollar, with shedding 0.66% to trade at 1.4021.
The pound had already come under pressure earlier Monday after data showing that sharply last month, as Brexit fears hit companies.
The dollar received an additional boost after data on Monday showing that at the fastest pace in more than 12 years in January.
The ISM non-manufacturing index rose from 56 in December to 59.9 last month, which was the highest level since August 2005.
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