U.S. jobs report pushes dollar higher on Friday

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Dollar Index jumps 0.6% Greenback highest since July 26 Safe havens Swiss yen and Indian franc hit Risk-on, higher yields boost the dollar Canadian dollar feel second blow from weak domestic jobs report by David Henry NEW YORK, Aug 6 - The dollar made its biggest daily gain in three weeks on Friday after a U.S. government report showed jobs grew more than expected in July, pushing up bond yields and adding to arguments for faster tightening of U.S. monetary policy The dollar index against major currencies up 0.6% 92.80 at 12: 40 p.m. Against the safe havens of the Swiss yen and Japanese franc, the dollar had its largest daily gains since June, reflecting a risk-on tone as well as the appeal of higher interest rates in Japan. The nonfarm payrolls forecast show that jobs grew in July by 943,000, compared with the 870,000 estimated by economists polled by Reuters. The news rekindled dollar momentum, grounded in the middle of the week by statements from Federal Reserve Vice Chair Richard Clarida suggesting that conditions for hiking interest rates could be met as soon as late 2022. Fed officials have said that improving employment is critical for when they begin to pull back further on the extra support they provided to the economy in the pandemic. Clarida's remarks lift real yields after five weeks of declines, while Treasury yields are set to snap a six-week decline streak excluding inflation. On Friday the yield on the Treasury note touched 1.30%, up from 1.18% on Monday. The greenback rose against the Swiss Franc and 0.45% on the Japanese Yen, which was traded at 110.27 for the dollar. The euro fell 0.6% to $1.1757, down 0.6%. It was driven earlier in the day by weaker than expected German industrial orders data. The British pound increased 0.4% to $1,838, about $1.387. The greenback rose 0.5% to 1,2561 Canadian dollars. Analysts have cautioned that markets will be looking for more evidence than one jobs report that U.S. yields will move significantly higher again. The yield in the Friday issue was still nearly one-half a percentage point lower than at the end of March. Reactions to monthly jobs reports have changed more often than not this year in the days after the data was released, strategists at Wells Fargo Securities found when they looked at following moves in the 10-year Treasury yield. Big moves across exchange rates are unlikely until Federal Reserve officials clear that they are ready to lead the other central banks in pulling back economic support, said Joseph Trevisani, senior analyst at fxstreet.com. The Fed is pumping far more money to the U.S. economy and distribution of wealth to the rest of the world than anybody else, Trevisani said. Markets will next watch for comments from Fed policymakers at the end of the month at a symposium of central bankers in Jackson Hole, Wyoming. When Fed policy makers are confident in U.S. job gains to raise interest rates, the global economy could be strong enough to keep riskier currencies instead of the dollar. A recent Reuters poll of strategists showed most predicting a dollar fall over the next year. We're in the phase where FX strategy will remain fairly solid, and that's going to provide some downside bias for the dollar, said Vasilieos Gkionakis, global manager of growth and global trade at Lombard Odier Group.