NEW YORK- The dollar jumped after data showed jobs growth beat expectations in February, backing up the view of Federal Reserve officials who have said that a recent rise in US government bond yields is justified by an improving economic outlook.
The jobs improvement came amid falling new COVID-19 cases, quickening vaccination rates and additional pandemic relief money from the government, putting the labor market recovery back on firmer footing and on course for further gains in the months ahead.
Nonfarm payrolls surged by 379,000 jobs last month, after rising 166,000 in January. In December, payrolls fell for the first time in eight months. Economists polled by Reuters had forecast February payrolls increasing by 182,000 jobs.
“This is a rather impressive nonfarm payroll report,” said Edward Moya, senior market analyst at OANDA in New York. “There’s momentum in the labor market and what that’s doing is providing I think more optimism that the growth picture is looking even better.”
A rollout of COVID-19 vaccines and impending US fiscal stimulus have boosted confidence in an economic recovery, adding fuel to expectations of higher inflation.
“As the economy reopens, we are beginning to see significant legs to the reflation story. This strong NFP bolsters the story, which is pressing the Fed to move up the timeline for rate hikes,” said Justin Hoogendoorn, managing director of fixed income at Piper Sandler Financial Strategies in Chicago.
The dollar index jumped as high as 92.201, the highest since Nov. 25, before retracing back to 91.965, still up 0.36 percent on the day. The euro fell as low as $1.1892, the lowest since Nov. 26, before bouncing back to $1.1915, down 0.49 percent on the day.
Benchmark 10-year Treasury yields hit a one-year high of 1.625 percent, and were last at 1.551 percent.
The jobs data comes after Fed Chairman Jerome Powell on Thursday disappointed investors who were expecting him to express concerns about rising bond yields.
Powell stuck to his stance of keeping interest rates low until the economy has recovered, adding that the sell-off in Treasuries was not “disorderly”.