Dollar Rises Modestly in Anticipation of Strong U.S. Jobs Report

By James Ramage 

        The dollar edged higher against the euro and the yen on Monday as investors anticipate a strong U.S. jobs report later in the week, which would push forward expectations for higher borrowing costs.
        The dollar rose 0.3% versus the common currency, as one euro bought $1.0957. The Wall Street Journal Dollar Index, which compares the buck against a group of 16 widely traded currencies, increased 0.2% to 88.77, its highest since March 17.
        Investors continue to bet that an improving U.S. economy will persuade the Federal Reserve to raise short-term interest rates from near zero, a move that would make the dollar more attractive to yield-hungry investors. In doing so, the Fed would be the first major central bank to raise borrowing costs, while the European Central Bank and the Bank of Japan continue to ease policy to lift growth using measures that also weaken their respective currencies.
        Traders and investors are looking to U.S. nonfarm payrolls numbers, which will be released Friday. Economists predict that the U.S. will have created 215,000 jobs last month versus 223,000 in June, the unemployment rate will hold steady at 5.3% and average hourly earnings will have risen 0.3% from a flat reading one month earlier.
        Economists regard monthly job gains above 200,000 as consistent with strong employment growth. Investors predict the U.S. economy will continue to add jobs at this pace over the coming months, encouraging the Fed to lift rates in September.
        "The market appears to be looking forward to a month of decent jobs gains; that's keeping the dollar afloat," said Sireen Harajli, foreign exchange strategist at Mizuho Bank.
        The dollar's strong gains over much of the past year slowed in March after soft U.S. data raised doubts about the Fed's timing for raising interest rates. Investors on Monday largely looked past mixed numbers for U.S. manufacturing, construction, personal spending, income and inflation.
        The dollar traded flat against the yen at Yen123.88.
        (END) Dow Jones Newswires

        August 03, 2015 13:32 ET (17:32 GMT)

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