Dollar shines as jobs report supports case for Fed hike in Sept
The dollar held firm in early Asia on Monday, trading near 13-year highs against the yen after strong U.S. employment data bolstered expectations for an interest rate hike by the Federal Reserve before year-end.
U.S. nonfarm payrolls jumped 280,000 last month, the largest gain since December, while payrolls for March and April were revised to show 32,000 more jobs were created than previously reported, the U.S. Labor Department said.
After the data, the dollar index rose to as high as 96.909 on Friday, rebounding from 95.357. It last stood at 96.402.
The dollar's strength was most notable against the yen, which has remained on a slippery slope after breaking below its long-held trading range late last month. The dollar rose to a 13-year high of 125.86 yen on Friday, and last stood at 125.66 yen.
"The payrolls data is making the case for a strong dollar doubly sure... The markets could even think that the Fed might raise rates even twice this year," said Masatoshi Omata, senior manager of market trading at Resona Bank.
A Reuters poll conducted after the payrolls data on Friday showed Wall Street's top banks expect the Fed to begin raising interest rates in September, followed by another before the end of the year.
New York Fed President William Dudley also said on Friday that he still expects the Fed will be in position to raise rates later this year even as he has concerns about progress in the labor market.
Currency speculators increased their bets against the yen, with their net yen short positions rising to the biggest level in four months last week, data from U.S. financial watchdog showed on Friday.
"I feel the yen's latest decline is still in its early stage, with no sign of an overhearing market. The yen will probably keep falling, to who knows, maybe 129 to the dollar," said Osao Iizuka, chief dealer at Sumitomo Mitsui Trust Bank.
The dollar was also well bid on the euro, which has been volatile in recent weeks on shifting market sentiment on Greece's debt travails.
The latest news out of Europe is not so encouraging for the euro.
European Commission President Jean-Claude Juncker on Sunday openly accused Greek Prime Minister Alexis Tsipras of distorting proposals by international creditors for a cash-for-reform agreement and of dragging his feet in offering an alternative.
"It seems like they are completely falling out with each other," said Resona Bank's Omata.
The euro changed hands at $1.1108, retreating from a half-month peak of $1.1380 hit on Thursday.