Strong U.S. jobs data boosts dollar and stocks

Fri Oct 3, 2014 4:54pm EDT
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By Herbert Lash

NEW YORK (Reuters) - The U.S. dollar climbed to its highest in more than four years against a basket of currencies and major stock markets surged on Friday after data showed U.S. employers stepped up hiring last month and the jobless rate fell to a six-year low in further signs of a strengthening economy.

The strong dollar pushed gold XAU= below $1,200 an ounce for the first time this year after the U.S. Labor Department reported non-farm payrolls rose 248,000 in September and the jobless rate fell two-tenths of a point to 5.9 percent.

The better-than-expected report knocked the euro to a more than two-year low against the dollar. The dollar index, a measure of the greenback against six major currencies, is poised to post its biggest yearly gain in nine years, up 8 percent so far in 2014.

Stocks on Wall Street jumped more than 1.0 percent, with the S&P 500 posting its best day in almost two months. European shares finished with a gain of just under 1.0 percent.

"There were a number of fears in the market, and the market had been giving up a lot of its gains. I think the jobs report took away a lot of the near-term concerns about the pace of the U.S. economy's (growth)," said Robbert Van Batenburg, director of market strategy at Newedge USA LLC in New York.

Traders boosted bets the Federal Reserve could hike interest rates slightly earlier next year than anticipated. Rate futures contracts show traders are betting that the first Fed rate hike will come next July, based on CME FedWatch, which tracks rate hike expectations using its fed funds futures contracts.

The dollar index hit a high of 86.746 .DXY, its strongest since June 2010, and was last up 1.24 percent at 86.661.

Against the yen, the greenback jumped 1.25 percent to 109.77 yen JPY=, while the euro EUR= slid 1.22 percent to $1.2514.   Continued...

The Wall St. sign is seen outside the door to the New York Stock Exchange in New York's financial district February 4, 2014.   REUTERS/Brendan McDermid