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US dollar strengthens as traders reduce expectations for interest rate cuts due to robust jobs report.

Dollar Jumps After Strong Jobs Report

Dollar Soars to Seven-Week High

The dollar surged to a seven-week high in a widespread rally on Friday following the release of data indicating a significant increase in jobs in January. This development has reduced the likelihood of imminent interest rate cuts by the Federal Reserve.

Robust Job Growth

Nonfarm payrolls saw a remarkable surge of 353,000 last month, surpassing economists’ projections of a gain of 180,000. Additionally, average hourly earnings rose by 0.6% after a 0.4% increase in December.

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Impact on Market Sentiment

According to Marc Chandler, chief market strategist at Bannockburn Global Forex, the data “blew away expectations,” resulting in a reduction of the probability for a rate cut in March and a decrease in anticipated rate cuts by the Fed for the year.

Market Dynamics

The dollar had experienced recent weakening alongside falling Treasury yields, despite Fed Chair Jerome Powell’s remarks indicating the unlikelihood of a March rate cut. However, renewed concerns about the financial health of U.S. regional banks saw a shift in market sentiment, contributing to the dollar’s resurgence.

Repositioning and Projections

Recent movements in the dollar and Treasury yields reflect repositioning following a robust January for the greenback and higher Treasury yields during the month. Traders are now pricing in a 21% chance of a rate cut in March, down from 38% on Thursday, and a 75% probability for May, down from 94%.

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Global Currency Movement

Several major currencies felt the impact of the dollar’s strength, with the euro falling to $1.07810 and the British pound dropping to $1.26140, the lowest since Jan. 17. The Australian dollar also fell to a 10-week low of $0.65035.

Cryptocurrency Market

In the realm of cryptocurrencies, bitcoin experienced a 0.19% decline to $43,020, reflecting the broader market trends.



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