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U.S. Jobs Market Boosts Dollar to One-Month High

Due to strong U.S. economic data, the dollar hit an almost one-month high against a basket of currencies on Friday.

Dollar Bills
Dollar Bills

The number of Americans filing for unemployment benefits fell to a three-month low last week, and layoffs decreased by 43% in December. Additionally, private employment increased by 235,000 jobs in December, surpassing the expected 150,000 increase. The dollar index rose 0.09% to 105.21, with a weekly gain of over 1.6%, its largest since September. This positive employment news suggests that while there may be a weakness in some sectors, there is still strong demand for workers in other parts of the economy.

Most Major Currencies Fall as Dollar Rises

Most major currencies were lower on Friday, following the previous day's surge in the dollar. The pound was 0.1% higher at $1.1920 after falling to a six-week low of $1.1873 on Thursday. The euro rose 0.02% to $1.0522 after dropping 0.8% to a three-week low of $1.0515 the day before.

The dollar climbed 0.36% to 133.88 yen, close to its one-week high of 134.045 yen on Thursday. Markets will now turn to the closely-watched nonfarm payrolls report, with economists predicting the U.S. economy will have added 200,000 jobs in December. Inflation figures for the eurozone in December are also set to be released, with an expected annual inflation rate of 9.7%.

Aussie and Kiwi Currencies Struggle

The Australian dollar was 0.1% higher at $0.6759 after falling 1.3% the previous day and reversing most of its earlier gains on news that China had eased restrictions on coal imports from Australia. The New Zealand dollar rose 0.24% to $0.6238, following a 1% decline on Thursday, and is on track for a weekly loss of nearly 2%, its worst performance since September. The low inflation numbers and weaker oil and gas prices may weigh on the euro, but from terms of trade perspective, the drop in these prices is positive for eurozone growth prospects.