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U.S. Dollar Surges on Strong Jobs Report

Investing.com - The U.S. dollar jumped on Friday after the economy added more jobs than expected in June, dampening expectations that the Federal Reserve will cut rates aggressively to stave off a slowdown.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, jumped 0.7% to a three-week high of 96.968 by 10:31 AM ET (14:31 GMT).

Nonfarm payrolls rose by 224,000 in June, well above consensus expectations for 160,000 and a sharp rebound from a downwardly-revised 72,000 in May.

The euro and sterling both lost over half a cent against the dollar on the news, the euro falling as low at $1.1208 and the pound falling to a six-month low of $1.2482.

"Taking it all together, it is an encouraging report that suggests the broad economy is currently shrugging off the U.S.-China trade uncertainty,” ING Chief International Economist James Knightley wrote in a blog post.

The Fed opened the door at its last policy meeting for a rate cut to mitigate the effects of the U.S.'s various trade disputes, and is expected to cut rates by 25 basis points in July, with traders expecting a total of three rate cuts this year.

“The resilience of the U.S. jobs market is a key reason why we believe risks are skewed towards more modest Fed policy loosening relative to market expectations,” Knightley said.

The dollar was higher against the Japanese yen, with USD/JPY rising 0.8% to 108.58. Against the loonie, the dollar gained 0.6% to 1.3129 after data showed that the Canadian economy lost 2,200 jobs in June.

The data also caused the dollar to bounce against emerging market currencies, which have benefited most from the Fed's recent pivot to an easing bias. It rose 0.6% against the Brazilian real after hitting a three-month low against it on Thursday, while it also rose 1.3% against the Argentinian peso and 0.2% against the Mexican peso.

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