Forex - Dollar gains on waning prospects for Fed easing

Published 03/09/2012, 02:56 PM
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Investing.com - The dollar rose against the world's major currencies on Friday after solid unemployment figures hit the wire in the U.S. and doused already waning expectations that the Federal Reserve will roll out easing measures to kick-start economic growth.

In afternoon U.S. trading on Friday, the euro was down against the greenback, with EUR/USD losing 1.25% and trading at 1.3196.

In the U.S. earlier Friday, the Bureau of Labor Statistics reported the world's largest economy added a net 227,000 nonfarm payrolls in February, outpacing expectations for a gain of 215,000.

Meanwhile, the government revised January's figures upward to 284,000 from 243,000.

The news put to rest sentiment that the Federal Reserve was considering extraordinary easing measures to jolt the economy, including quantitative easing, which are asset purchases from banks that weaken the dollar.

The Fed has carried out two rounds of quantitative easing since the downturn, pumping USD2.3 trillion into the financial system in the process.

Stronger demand for jobs makes such a policy less likely.

Meanwhile in Europe, creditors representing 85.8% of Greece's private debt have restructured with the country, although that figure will rise to 95.7% now that the country activated Collective Action Clauses to force the holdouts into the deal.

That has many market watchers expecting credit default swaps to kick in, which was bearish for the euro.

Also in the U.S., the country's trade gap widened further than expected, coming to USD52.6 billion.

Canada's trade balance came in better than expected, and strong jobs data out of the U.S., its major trading partner, bolstered the Canadian dollar against the greenback.

German inflation figures fell in line with expectations, rising 0.7% in February from January.

Meanwhile, the dollar was up against the pound, with GBP/USD down 1.02% and trading at 1.5667, as U.K. manufacturing and industrial output figures came in weaker than expected.

The greenback was up 1.14% against the yen, with USD/JPY trading at 82.49, and up against the Swiss franc, with USD/CHF up 1.21% and trading at 0.9193.

The greenback was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.05% at 0.9897, AUD/USD down 0.55% at 1.0585 and NZD/USD down 0.22% at 0.8226.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 1.08% at 80.03.

On Monday, the U.S. will release its federal budget balance.





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