Dollar Jumps After Better-Than-Expected Jobs Number

 
   By James Ramage and Nicole Hong 
 

        The dollar gained against most major currencies Friday after the April U.S. jobs report came in above expectations.
        The Labor Department reported the U.S. economy added 288,000 jobs in April, above expectations of 215,000. The unemployment rate dropped to 6.3% in April from 6.7% in March, as more Americans joined the workforce.
        The dollar rose 0.6% against the yen, to JPY102.91, from JPY102.50 prior to the number's release. The yen is at its weakest level since April 8. Meanwhile, the euro fell 0.4% versus the dollar, trading at $1.3824, from $1.3861 before the data.
        "The report shows winter weakness was temporary; growth is back on track," said Aroop Chatterjee, chief FX quantitative strategist at Barclays. "Broadly, it means the dollar should push higher against the euro and the yen."
        Investors were looking for the April jobs number to confirm the message of Federal Reserve Chairwoman Janet Yellen, who has said that a long and unusually harsh winter weighed upon the U.S. economy. Many data points for the winter months arrived below expectations, causing investors to wonder if the economy's recovery from the financial crisis had stalled. Most recently, gross domestic product for the first quarter grew at an annual rate of 0.1% in the first quarter, below expectations of 1.1% growth.
        The Fed has mostly dismissed the soft numbers and continued on its path of holding its key interest rate near zero and reducing its monthly bond purchases. On Wednesday, the central bank said it would trim purchases by $10 billion in May, to $45 million from $55 million.
        The central bank has maintained that it would keep short-term interest rates at current levels well after it is due to conclude its bond-purchasing program at the end of 2014. Investors predict the Fed would start to raise rates midway through 2015 at the earliest.
        Higher U.S. rates increase the allure of holding dollars as it boosts returns over those currencies of countries that keep interest rates unchanged or lower them.
        The dollar also rose against most emerging-market currencies because the jobs report raises the likelihood that the Federal Reserve may quicken the pace of its stimulus reduction or raise interest rates earlier than expected. That would be negative for emerging-market currencies because Fed stimulus and low interest rates in the U.S. have bolstered demand for higher-yielding assets in developing countries since the financial crisis. Emerging-market currencies have been under significant pressure ever since Fed officials hinted last May that they may begin pulling back stimulus.
        Some of the biggest decliners after the jobs report were the South African rand and the Polish zloty. Against the rand, the dollar was at ZAR10.5438, up 0.5%. Against the zloty, the dollar traded at PLZ3.0420, up 0.6%.
        Write to James Ramage at james.ramage@wsj.com
        (END) Dow Jones Newswires

        May 02, 2014 08:58 ET (12:58 GMT)