Dollar hits seven-month high on jobs data; oil slumps

Fri Nov 6, 2015 4:42pm EST
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By Herbert Lash

NEW YORK (Reuters) - The dollar jumped to a seven-month high on Friday, pushing oil prices lower, and short-term U.S. bond yields rose to the highest in five years after strong U.S. jobs data bolstered expectations the Federal Reserve will raise interest rates in December.

Nonfarm payrolls increased 271,000 in October, the largest gain since last December, while average hourly earnings rose a respectable 9 cents, the U.S. Labor Department said. The unemployment rate fell to 5.0 percent, the lowest since April 2008 and in a range many Fed officials consider to be full employment.

The robust report boosted the likelihood the Fed will raise rates before year's end, which would be the first increase in almost a decade and end seven years of easy monetary policy.

"This is a blow-out number," said Kevin Giddis, head of fixed-income capital markets at Raymond James in Memphis, Tennessee. "There's a pretty strong feeling that the Fed is going to hike rates a quarter of a point in December."

The dollar index .DXY of six major trading currencies hit a high of 99.345, its strongest since mid-April. It was last up 1.26 percent at 99.170.

Kathy Lien, managing director at BK Asset Management in New York, said: "You're going to see a renewed appetite for U.S. dollars."

The euro fell to $1.708 EUR=, its lowest since April, and last traded down 1.31 percent at $1.0738.

The dollar rose to 123.26 yen JPY=, its highest since Aug. 21, and last traded at 123.21, up 1.21 percent.   Continued...

A woman counts her U.S. dollar bills at a money changer in Jakarta June 13, 2012.  REUTERS/Beawiharta