US Dollar Index Rallies Above 92.00 on Market Turmoil, Stellar Jobs Report

The US dollar is finding strength in chaos in the financial markets and a better-than-expected February jobs report. The greenback has been rising over the last week amid turmoil in the equities arena. With positive economic data, the buck could strengthen even more, continuing to defy market expectations for a bear market in the dollar.

According to the Bureau of Labor Statistics (BLS), the US economy added 379,000 new jobs, beating the median estimate of 182,000. This is up from the 166,000 new positions created in January, and it is the best reading in four months. The unemployment rate dipped to 6.3%, better than the market forecast of 6.3%.
The number of jobs lost in December was raised from 227,000 to 306,000 and the tally in January was revised upward from 49,000 to 166,000.
Last month’s labor gains were concentrated in leisure and hospitality (355,000), professional and business services (63,000), education and health care (44,000), retail trade (41,100), and manufacturing (21,000). The largest contraction was seen in government (-86,000) and construction (-61,000).
Most of the improvement in the labor market stemmed from more economies reopening. As the vaccines are rolled out across the country, more states will remove restrictions, allowing for businesses to restart. Texas and Mississippi have already abandoned maks mandates and permitted companies to operate at full capacity, much to the dismay of the White House.
The monthly snapshot of the labor market also highlighted that average hourly earnings edged up 0.2%, average weekly hours slipped to 34.6, and the labor force participation rate was unchanged at 61.4%.
But while optimism reigns supreme right now, there is still a long way to go, says senior economist Daniel Zhao of Glassdoor.

The engine of economic recovery is restarting as the pandemic’s winter wave recedes, although there is still a long way to go. The economy would need to add almost 1 million jobs a month for the rest of 2021 to return to pre-crisis levels by the end of the year.

In other economic data, the trade deficit widened to $68.2 billion in January as exports rose 1% to an 11-month high of $67.5 billion and imports jumped 1.2% to a 19-month high of $260.2 billion.
On Thursday, Federal Reserve Chair Jerome Powell delivered remarks to a Wall Street Journal virtual conference, revealing that he thinks inflation could arise from a reopening economy. This is in contrast to previous statements, dismissing inflation concerns. Still, even with growing inflation concerns, he does not intend to raise interest rates or tighten monetary policy until full employment is achieved and inflation tops the central bank’s 2% target.
The comments sent financial markets spiraling downward, with the leading benchmarks falling at least 2%. The Nasdaq Composite Index turned negative on the year.
The US bond market was mixed at the end of the trading week, with the 10-year Treasury yield up 0.014% to 1.564%. The one-year bill edged up 0.002% to 0.81%, while the 30-year bond tumbled 0.027% to 2.281%.
The US Dollar Index (DXY), which gauges the greenback against a basket of currencies, surged 0.44% to 92.03, from an opening of 91.66. The index will record a weekly gain of 1.27%, bringing its year-to-date rally to 2.35%.
The USD/CAD currency pair rose 0.09% to 1.2681, from an opening of 1.2666, at 15:46 GMT on Friday. The EUR/USD dropped 0.54% to 1.1908, from an opening of 1.1971.
If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

Original from: www.earnforex.com