Dollar Rebounds After Strong Jobs Report, Yen Set for Biggest Gain in Months
The US dollar rebounded on Friday after the August jobs report exceeded expectations, prompting traders to increase their bets for a Federal Reserve rate hike later this month. The dollar was headed for a weekly loss due to lower U.S. Treasury yields on Thursday and a sharp rally in the Japanese yen. At 15:40 ET (19:40 GMT), the US dollar index rose by 0.3% to 99.18, but still fell 0.5% for the week.
Traders added to their bets that the Fed would deliver a rate hike on September 16, with the odds of a 25-basis-point increase rising to around 58%, up from about 52%. The jobs data hinted at an overheating economy and higher inflation, which often prompts central banks to tighten policy. President Donald Trump called for lower interest rates despite touting the strong employment numbers.
The yen weakened on Friday after a massive 1.9% surge in the previous session that took it to a one-month high of 155.30. Despite no confirmed official intervention, the yen was set for a 2.5% weekly gain, its strongest performance since late July. The rally has been driven by bets that the Bank of Japan will deliver a rate hike at their September meeting.
Elsewhere in currencies, the Canadian dollar slipped as government data showed Canada's labor market weakened sharply in August, with employment falling by 41.7k jobs. The euro was up 0.2% for the week ahead of the European Central Bank's interest rate decision on September 10.