Robust US jobs data leads to dollar rally

London (Mar 7)  Another strong US jobs report gave the dollar a big lift on Friday as traders think it may prompt the Federal Reserve to raise interest rates this summer. Stocks, meanwhile, were fairly flat-footed as any concerns over higher borrowing rates are offset by hopes over the US economic outlook.

In  Europe  ,  Germany's  DAX rose 0.5 per cent to 11,556 while the CAC-40 in  France  rose 0.3 per cent to 4,977. The  FTSE  100 index of leading British shares underperformed its counterparts, trading 0.2 per cent lower at 6,949. US stocks were poised for a flat opening with Dow futures and the S&P 500 futures both up 0.1 per cent.

The figures are likely to fuel speculation that the Fed could raise interest rates in June. Last week, Fed chair  Janet Yellen  indicated that a summer hike was possible while leaving the door open to a later increase.

"All things considered, I think this is a very good labour market report and will only feed into expectations for a rate hike from the Fed in June," said  Craig Erlam  , senior market analyst at  OANDA  . "The rally in the dollar immediately after the release clearly supports this view."

Employers added 295,000 workers to payrolls in February and the US unemployment rate fell to 5.5 per cent, figures from the  Labour Department  showed. Diverging outlooks of the US and other countries have seen the dollar rise against most global peers this year. Yields are collapsing from German 30-year bunds to  Portugal's  two-year notes before the  European Central Bank  begins its quantitative-easing plan this week.

The median forecast in a Bloomberg survey of 96 economists projected employment would rise by 235,000. Estimates ranged from 150,000 to 370,000. The jobless rate was projected to drop to 5.6 per cent from January's 5.7 per cent.

The dollar was the main mover after the release of the figures as traders priced in an earlier rate hike. The euro, already at 12-year lows, slid 1.4 per cent to  $1.0881  while the dollar rose 0.5 per cent to  120.81 yen  .

Asian stock markets closed mostly higher, except for  China  and  Hong Kong  , boosted by an upgraded growth forecast for the eurozone.  Japan's   Nikkei  225 rose 1.2 per cent to 18,971.00 and  South Korea's  Kospi added 0.7 per cent to 2,012.94.  Hong Kong's  Hang Seng edged down 0.1 per cent to 24,164.00.

Benchmark US crude was up  12 cents  to  $50.88  a barrel in electronic trading on the  New York Mercantile Exchange  . Brent crude, the international benchmark, was up  27 cents  to  $60.75  in  London.

Source: KhaleeTimes