Non-Farm Payrolls Lift US Dollar

The US dollar rallied against most major peers today after employment data showed better-than-expected readings for all major indicators. The Great Britain pound managed to outperform the greenback, though, thanks to the positive report about Britain’s manufacturing.

Nonfarm payrolls showed a healthy growth of 223,000 in May, which was far bigger than 189,000 promised by economists. The unemployment rate unexpectedly fell by 0.1 percentage point to 3.8%. Average hourly earning rose 0.3%, also beating expectations. What is more, almost all other macroeconomic reports released in the United States over the current trading session were good and exceeded forecasts.

The positive data overshadowed the threat of trade wars, at least for now. The robust growth of employment supported the outlook for continuation of monetary tightening by the Federal Reserve. According to the CME FedWatch tool, speculators were pricing in a 91% probability of an interest rate hike in June, a 66% chance of another hike in September, and a 35% chance of yet another rate increase in December.

EUR/USD fell from 1.1690 to 1.1660 as of 19:34 GMT today. USD/JPY rallied from 108.80 to 109.56. At the same time, GBP/USD jumped from 1.3293 to 1.3348, bouncing from the daily low of 1.3254.

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