(Bloomberg) -- The dollar rose versus the euro after U.S. jobs growth exceeded forecasts, providing the Federal Reserve with added scope to raise interest rates.
Nonfarm payrolls climbed 287,000 in June compared with the 180,000 forecast by economists surveyed by Bloomberg. The jobless rate rose to 4.9 percent as more people entered the labor force. Wages advanced less than projected.
“This is dollar-supportive, if not wildly so,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark. “The market is cautious in putting too much into a single data point.”
The U.S. currency gained 0.3 percent to $1.1027 per euro as of 8:39 a.m. in New York.The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, was little changed after falling as much as 0.2 percent.
A gauge of the greenback has slumped more than 3.5 percent this year, falling alongside the odds of a Fed rate increase. After the central bank kept borrowing costs unchanged last month, Fed Chair Janet Yellen cited the risks from Brexit, dimming the relative allure of the U.S. currency.
After raising its target rate in December, traders see a 24 percent chance that the Fed will raise interest rates by the end of the year, futures contracts indicate. That's up from 12 percent a week ago.
"There's plenty of scope for those expectations to increase," said Eric Viloria, a currency strategist in New York at Wells Fargo & Co. "The dollar is likely to continue to strengthen."
Hedge funds and money managers cut net-bullish positions on the dollar versus eight major peers last week, according to the Commodity Futures Trading Commission. Bets that the currency will rise outnumbered bearish wagers by 96,184 contracts in the week to June 28, compared with 130,989 the previous week.
The U.S. currency is projected to strengthen to $1.08 per euro and 105 yen by the end of the year, according to Bloomberg surveys of analysts.
To contact the reporters on this story: Lananh Nguyen in New York at lnguyen35@bloomberg.net, Susanne Barton in New York at swalker33@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Paul Cox, Mark Tannenbaum
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