Forex – Dollar Turns Positive, Shrugs Off Weak Jobs Report

© Reuters.

Investing.com – The dollar turned positive against a basket of major currencies shrugging off weaker-than-expected payrolls data but gains were capped by a surge in the Canadian dollar amid bullish employment data.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.13% to 91.71.

The dollar held gains despite falling expectations for a more rapid pace of US rate hikes after the economy created fewer jobs than expected.

The Labor Departed reported the US economy created just in December, below the 190,000 jobs expected by economists, while wage growth, was in line with expectations,

The subdued jobs report reduced investor expectations for a more aggressive path to higher interest rates, said TD Securities, as the Federal Reserve would likely need to see more “convincing evidence” of inflationary pressures prior to raising rates in March.

Other market participants, however, downplayed the impact of the report. Pantheon chief economists Ian Shepherdson left his rate hike expectations unchanged and expects a hike in March followed by further rate hikes at the end of each quarter this year. Shepherdson noted that the three-month moving average payroll is 203,000, which is “more than enough” to keep the labor market tightening.

A sharp uptick in the Canadian dollar weighed on upside momentum in the greenback amid a report which added to growing expectations that the Bank of Canada may raise its bench rate at its upcoming meeting later in January.

fell 0.69% to C$1.2403.

The euro pared recent gains against the greenback but steadied at a three-year high, while tacked on 0.11% to $1.3563.

gained 0.40% to Y113.21.

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