Dollar dips as Fed unlikely to hike this year even with U.S. jobs

Fri Jul 8, 2016 4:27pm EDT
 
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By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - The dollar slid against the yen and some currencies on Friday in choppy trading on the view that the much stronger-than-expected U.S. employment payrolls report will not persuade the Federal Reserve just yet to raise interest rates again this year.

The greenback did rise after the U.S. jobs data, reversing losses against the yen and climbing to two-week highs against the euro and a five-week peak versus the Swiss franc. But gains against the yen evaporated and the dollar traded mostly lower on the day.

The dollar, however, remained higher against the euro and Swiss franc, but fell versus the Australian, Canadian, and New Zealand currencies.

Data showed that non-farm payrolls increased by 287,000 jobs last month, the largest gain since last October. May's payroll count was revised down to only 11,000 from the previously reported 38,000.

"It will likely require continued evidence of positive economic data in the months to come, including solid NFP (non-farm payroll) numbers, in order to convince the Fed that a rate hike would be appropriate," said James Chen, currency strategist, at Forex.com in New Jersey.

Fed funds futures, based on the CME Group's FedWatch, have not priced in a rate increase this year and for much of 2017. The futures data has priced in just a 28.2 percent chance that the Fed will increase rates at the June 2017 meeting.

In late trading, the dollar fell 0.4 percent against the yen to 100.46 yen JPY=, not far from the post-Brexit low of 99 yen.

"The psychological 100.00 yen mark has long been seen by traders as the key 'line-in-the-sand' in terms of the potential risk of Japanese intervention," said Forex.com's Chen.   Continued...

 
Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009.  REUTERS/Rick Wilking/File Photo