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The U.S. dollar took a hit Friday when February jobs numbers came in way below what economists expected. But here’s the thing – despite that Friday stumble, the greenback still managed to post its biggest weekly gain since August, which pretty much sums up how wild currency markets have been lately.
Labor Department data showed the economy added just 150,000 jobs last month, falling short of the 200,000 forecast that most Wall Street analysts were banking on. The unemployment rate also ticked up to 3.6%, which wasn’t exactly what traders wanted to see. And yet, the dollar index – that’s the measure against six major currencies – only dropped 0.3% to 104.20 on Friday but still closed the week up a solid 1.5%. Talk about mixed signals.
Markets went crazy after the numbers hit.
The euro jumped 0.4% against the dollar, ending at $1.0800, while the Japanese yen gained 0.2% to 136.00 per dollar. Traders were basically scrambling to figure out what Jerome Powell and the Fed crew might do next. Powell has been dropping hints that rates could go higher if inflation keeps being stubborn, but these job numbers throw a wrench into that whole plan.
Some currency guys think the dollar’s Friday retreat won’t last long. They’re pointing to what they see as solid economic fundamentals underneath all this messy data. But there’s definitely a lot of caution out there right now, and you can feel it in how people are trading.
The British pound climbed 0.5% to $1.2150 on Friday. Traders are betting the Bank of England might hike rates again, which has been giving the pound some support lately. It’s kind of interesting how different central banks are dealing with their own inflation problems.
Next week’s going to be huge. The Consumer Price Index comes out, and that inflation data could really shake things up for Fed policy. Everyone’s watching that release like hawks because it might give us a clearer picture of where rates are headed.
China’s yuan got a bit stronger too, closing at 6.9200 per dollar. Beijing’s economic policies keep messing with currency flows in ways that aren’t always easy to predict. Meanwhile, emerging market currencies were all over the place – Brazil’s real gained ground while South Africa’s rand faced some serious pressure.
Gold prices reacted to the jobs mess by rising 0.6% to $1,850 per ounce Friday, bouncing back from earlier losses during the week. The precious metal often moves opposite to the dollar, especially when investors start getting nervous about economic uncertainty and looking for safe places to park their money. Related coverage: Dollar Jumps as Oil Hits Seven-Month.
U.S. Treasury yields were bouncing around too. The 10-year yield settled at 3.85%, down from Thursday’s 3.90%. Bond prices typically rise when yields fall, and that’s exactly what happened as investors digested the employment report and started repositioning for whatever comes next.
Wall Street didn’t seem too bothered by the jobs report though. The S&P 500 closed up 0.2% at 4,150 points, while the Dow Jones Industrial Average gained 0.1% to finish at 33,700. Investors seemed to balance the mixed employment data with hopes that maybe the Fed won’t be as aggressive as feared.
Currency strategists at BNP Paribas put out a note Friday saying the dollar’s performance still looks pretty robust over the medium term. They’re highlighting how the currency has been resilient against economic headwinds, though they admit short-term volatility is probably here to stay.
The Canadian dollar saw a modest bump Friday, closing at 1.3600 against the U.S. dollar. Analysts are crediting stronger-than-expected Canadian GDP data for the fourth quarter, which showed 0.5% growth. Not bad for our neighbors up north.
The Reserve Bank of Australia is set to release its monetary policy statement next week, and the Australian dollar ended Friday up 0.3% at 0.6700 per U.S. dollar. Traders are trying to guess what policy shifts might be coming in response to domestic inflation pressures down under.
European Central Bank meeting minutes from Thursday revealed ongoing worries about inflation. The ECB’s commitment to price stability could influence future euro movements, though it’s unclear exactly how aggressive they’ll get. This follows earlier reporting on Asian Currencies Rally Friday But Tank.
The Swiss franc stayed relatively stable at 0.9300 per U.S. dollar. The Swiss National Bank keeps focusing on curbing inflation, which continues supporting the franc’s strength.
India’s central bank kept its benchmark rate steady at 6.5% Thursday, citing persistent inflation risks. The Indian rupee closed at 82.10 per dollar Friday amid growing pressures on emerging market currencies.
Turkey’s lira had another volatile week, trading at 14.80 per dollar Friday. The Turkish central bank’s unorthodox policies keep weighing on investor sentiment as inflation remains a major headache.
The Mexican peso showed resilience, closing at 18.50 per dollar. Banco de México’s recent rate hikes have bolstered the currency, with the central bank maintaining a hawkish stance against inflationary pressures.
West Texas Intermediate crude settled at $78.30 per barrel Friday, boosted by supply constraints and geopolitical tensions.
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