The greenback extended gain against the Japanese yen to a one-month high of 111.79 on Friday after a report showed U.S. employers added more jobs than forecast last month, suggesting the economy will avoid a recession and reducing the chance of an aggressive interest rate cut.
U.S. employers added 94,000 jobs in November slightly higher than the expectation of 90,0000 jobs added and the jobless rate held steady at 4.7 %. The non-farms payrolls in October were upwardly revised to 170,000 from 166,000. Interest rates futures showed a 24 percent chance the Fed will lower its key interest rate by 0.5 percentage point to 4 percent on Dec. 11 after the strong jobs data. A quarter point reduction has been fully priced in.
The single currency briefly dropped versus the dollar to around 1.4609 on strong U.S. jobs data before rebounding to 1.4674. The British pound rebounded from 2.0221 to 2.0347 on short-covering. The greenback traded inside 1.1278-1.1334 range against Swiss franc.
U.S. currency tumbled against the Canadian dollar from 1.0150 to 1.0006 on a surprisingly strong Canadian jobs report, which showed that 42,600 jobs were added to the market in November versus the expectation of 10,000 jobs added although the unemployment ticked higher to 5.9%.
U.S. Treasury Secretary Henry Paulson said that the U.S. has a ‘very strong labor situation’ which reflects a ‘sound economy.’ Paulson reiterated a strong dollar is in the nation's interest, and that U.S. economic strength will be reflected in the currency, repeating his comments from last month.
Next week will the release of Japan’s economic watch, German trade balance and current account, U.K. PPI and DCLG house prices, U.S. pending home sales and leading indicators on Monday; Japan’s consumer confidence, German WPI, U.K. trade balance, eurozone and German ZEW survey, U.S. Fed rate decision on Tuesday; Japan’s domestic CGPI, trade balance and current account, U.K. ILO unemployment, eurozone industrial production and employment, U.S. and Canada trade balance respectively on Wednesday; U.K. RICS house prices, Japan’s industrial production, U.S. PPI, retail sales, jobless claims on Thursday; and Japan’s Tankan reports, German and eurozone HICP, U.S. CPI , industrial production and capacity utilization.