US Dollar (DXY) Index News: Treasury Yields, Greenback Climb on Robust Payroll Data

U.S. Dollar Rallies on Strong Jobs Report

The U.S. dollar surged on Friday following a robust nonfarm payrolls report, suggesting that the Federal Reserve might delay any potential easing of monetary policy this year. This rise in the greenback was primarily driven by an increase in U.S. Treasury yields.

At 14:24 GMT, the U.S. Dollar Index (DXY) is trading 104.804, up 0.713 or +0.68%.

Nonfarm Payrolls Exceed Expectations

The U.S. economy added 272,000 jobs in May, significantly surpassing the 185,000 jobs forecasted by economists. However, revisions for March and April showed 15,000 fewer jobs created than previously reported. Despite the positive job growth, the unemployment rate edged up to 4% from 3.9%, breaking a 27-month streak.

Treasury Yields Surge

Following the strong payrolls data, the yield on the 10-year Treasury rose by 14 basis points to 4.422%. Similarly, the 2-year Treasury yield increased by 14 basis points to 4.862%. These rising yields reflect market concerns that the Federal Reserve may not cut interest rates as soon as previously anticipated.

Currency Market Reactions

The dollar climbed 0.80% against the yen to 156.85, though it remained down 0.2% for the week. The euro fell 0.61% against the dollar to $1.0822, marking a 0.22% weekly decline, its largest since early April.

Fed Rate Outlook

The Federal Open Market Committee (FOMC) is not expected to change its policy at next week’s meeting. The futures market, however, now prices in just one rate cut of 25 basis points this year, likely in November or December. This strong payroll data complicates the Fed’s ability to reduce rates, contrasting with the European Central Bank’s recent rate cut.

Market Forecast

Given the stronger-than-expected jobs data and rising Treasury yields, the U.S. dollar is likely to remain supported in the near term. Traders should anticipate continued volatility as the market adjusts expectations regarding the Federal Reserve’s policy moves. The Fed’s decision-making process will be closely watched, especially in the context of the resilient U.S. economy.

Technical Analysis