The US dollar surged higher after the much-anticipated NFP employment data reading showed a very encouraging reading, thus triggering expectations for an earlier tightening of stimulus from the Federal Reserve (Fed).
The U.S. economy unexpectedly added 943,000 jobs in July, following a revised 938,000 increase in June. This reading far exceeds market projections for an increase of 870,000 jobs.
Meanwhile, the US unemployment rate fell to 5.4%from 5.9%, which was much better than expected to decline at 5.7%. The employment participation rate increased to 61.7%.
As is well known, the Fed has set a benchmark of ‘sustained substantial progress’ in its inflation and employment targets to begin tightening in its monetary policy.
The aftermath, with the reading of data showing this progress, caused the market to start having high hopes for the central bank to make a reduction in its asset purchases.
At the opening of the Asian session, the dollar index traded stronger at a two -week high against most major currencies at 92.90.
This positive reading also pushed the stock market to close higher last week, and drove 10 -year U.S. treasury yields to rise again above the 1.30%level.
The yen slipped to a nearly two -week low, while the euro plunged to a four -month low following a surge in the US dollar that left it trading around 1.17500.
