Dollar up on U.S. jobs data but investors skeptical about continued gains

New York (Feb 2)  The U.S. dollar rose on Friday against a number of currencies including the Japanese yen and the euro after strong national jobs data, but investors were not convinced the advance would continue past the day.

U.S. job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment. Nonfarm payrolls jumped by 200,000 jobs last month after rising 160,000 in December, the Labor Department said.

Richard Scalone, co-head of FX at TJM Brokerage in Boca Raton, Florida, said the data was stronger than expected, garnering higher U.S. yields and a higher dollar, but "nothing really has changed."

"The concerns and the selling in the dollar that we've seen have been more centered around other factors outside of U.S. growth, perhaps growth elsewhere, perhaps the potential for deficits due to Trump's tax package, etcetera," he said.

The dollar index , tracking the unit against a basket of major currencies, was up 0.73 percent at 89.317.

Against the yen, the dollar reached its highest since Jan. 23, and was up 0.88 percent at 110.35.

The yen has correlated inversely with U.S. Treasuries. The ten-year yield hit a four-year high on the day and last edged to 2.8544 percent, while the 30-year rose to 3.0793 percent. After the jobs data, the euro fell further against the dollar, decreasing 0.68 percent to $1.2423, compared with $1.2493 before the data's release.

Investors, however, were optimistic about the single currency's overall performance.

"We think the euro will outperform," TJM's Scalone said. "The euro has a lot more room to the upside."

The euro zone's economic revival and expectations of monetary tightening have made the euro more attractive for investors, while strong global growth around the world has encouraged investors to move cash out of the U.S. dollar.

A survey showed on Thursday that euro zone manufacturing continued to boom last month, bolstering a view that the European Central Bank is on track to normalize monetary policy. The euro has also benefited from ECB President Mario Draghi's reluctance to talk down the currency, giving bulls the green light to push the euro higher.

Sterling was at $1.413, down 0.94 percent on the day.

Reuters