Unemployment Rises, But the Dollar Rises – What's Going On?
The dollar index held above 100 on Friday (November 21) and is expected to rise nearly 1% throughout the week. This strengthening occurred as the market grew more confident that the Federal Reserve would not cut interest rates at its December meeting. The delayed US nonfarm payrolls report released Thursday showed employment increased in September, but the unemployment rate actually rose to 4.4%, a four-year high. This mixed data is not considered strong enough to change the Fed's outlook in the near term.
As the report is the last labor market data before the December FOMC meeting, many market participants now expect the Fed to maintain interest rates at their current levels. Economic uncertainty triggered by the US government shutdown also made the central bank more cautious. Fed Governor Michael Barr emphasized that the Fed should proceed slowly in considering additional interest rate cuts, given that inflation remains above its 2% target.
In the forex market, the dollar ended the week strong against almost all major currencies. The largest gains were recorded against the Japanese yen, New Zealand dollar (kiwi), and Australian dollar (aussie). This performance confirms that, despite less than entirely convincing US economic data, the dollar remains investors' top choice amid uncertainty over the direction of global interest rate policy. (az)
Source: Newsmaker.id
