US labor market shows signs of improvement, boosting dollar

The dollar was boosted against most major peers after data showed an improving US labor market. The closely watched nonfarm payrolls report came in much better than expected last month, showing 236,000 jobs were added to the economy from January. This was more than the expected 160,000 rise. Meanwhile, January’s figures were revised down by 38,000, now at 119,000 from 157,000.

The unemployment rate ticked down to 7.7 percent, from 7.9 percent, at a new low since December 2008.

Today’s upbeat data may be encouraging for Federal Reserve policy makers, who are looking for “substantial” progress in the labour market to determine whether to maintain the current level of  stimulus. Signs of improvement in the US economy could likely push the Fed to begin winding down quantitative easing measures, which tend to have a weakening effect on the dollar.

The NFP report showed factories boosted hiring last month, adding 14,000 workers compared with an expected 9,000 increase and following a 12,000 rise in the previous month. Auto manufacturing is expected to lead to more hiring in coming months. Also home-improvement retailers are among those announcing plans to take on more staff.

Dollar jumped against the yen by 0.8 percent to 96.55 yen from 95.69 beforehand.

Dollar –Swiss also gained 0.9 percent, to 0.9520 from 0.9432.

Against sterling, dollar also strengthened, leading the pound lower by 1 percent to a more than 2-1/2 year low of $1.4883, the lowest since June 2010.

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