Currency markets were subdued compared to more volatile financial instruments, where falling technology stocks swept Asia and destabilized European stock markets.
The dollar held its ground, strengthened after the release of data showing a 172,000 increase in non-farm payrolls last month, well above forecasts. The euro was near its lowest in nine weeks at $1.1525 and the pound was near a three-week low at $1.3344.
Jonas Goltermann, chief economist at Capital Economics, said, “The U.S. jobs report shows a strengthening U.S. labor market despite the ongoing energy crisis.” He added that a tightening of the Fed’s monetary policy at the end of the year is becoming increasingly likely.
Markets estimate the probability of a rate hike in September at around 50%, which could curb excessive optimism for the dollar.
Barclays strategists note that in the short term, dollar movement will be limited by a potential deal between the US and Iran, as well as the upcoming FOMC meeting.
The dollar has strengthened its position as a defensive asset, with the gap between US and non-US interest rates likely to widen. This had a particularly strong impact on the Japanese yen.
