The US dollar dropped against other major currencies on Friday after a stronger-than-expected jobs report fueled speculation that the Federal Reserve may delay its plans to taper asset purchases.
The Labor Department reported that the US economy added 562,000 jobs in November, beating expectations of 550,000. The unemployment rate also dropped to 4.2%, its lowest level since the pandemic began.
However, the positive report had an unexpected effect on the US dollar, which fell against other major currencies. The dollar index, which measures the greenback against a basket of currencies, fell 0.3% to 95.951.
Analysts attributed the dollar’s decline to the possibility that the strong jobs report may lead the Fed to delay its plans to taper its asset purchases. The central bank has previously indicated that it would begin to taper its $120 billion per month bond-buying program in the coming months, but the timing of the move remains uncertain.
The dollar’s decline was most pronounced against the euro, which rose 0.5% to $1.131. The dollar also fell against the Japanese yen, the Swiss franc, and the British pound.
Investors will be closely watching the Fed’s upcoming policy meeting on December 14-15 for any hints about the central bank’s plans to taper its asset purchases. Many analysts believe that the strong jobs report may lead the Fed to delay its plans, which could lead to further volatility in the currency markets.
Overall, the strong jobs report was seen as a positive sign for the US economy, but its impact on the dollar highlights the complex interplay between economic data and currency markets. As always, investors will need to stay vigilant and stay informed in order to navigate these ever-changing market conditions.
