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US jobs data increase likelihood of Fed rate hike
The US private sector added 295,000 jobs in February according to the nonfarm payrolls report released on Friday. The numbers beat forecasts that expected an increase of just 235,000 jobs.
The stronger than expected job growth brought down the unemployment rate from 5.7 percent to 5.5 percent, falling further than the 5.6 percent that was predicted by economists.
The solid jobs data increased speculation that the Federal Reserve could now raise its rates as early as this June, the first increase since the financial crisis.
The dollar surged on the news, rising against most major counterparts. Against the yen it hit a high of 121.28 on Friday.
The euro was pushed even lower against the dollar, to reach a new eleven year low of 1.0822 by Monday.
The growing divergence between the central bank polices if the Federal Reserve and the European Central Bank are weakening the euro versus the dollar. The latter has recently loosened monetary policy and will launch a new bond buying program on March 9 in an effort to fight deflation and stimulate the Eurozone economy. Anticipation of the stimulus scheme has weighed on the euro, leading some analysts to speculate that the US and European currencies could hit parity.
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