Dollar Reverses Slide on Jobs Data, Outlook on Mexico
NEW YORK (AP) _ The dollar advanced Friday, strengthening at the end of a tumultuous week on strong U.S. economic data and positive reverberations from Mexico’s plan to mend its economic problems.
A Labor Department jobs report that showed lower unemployment and strong job growth was interpreted as a sign that the economy remains robust, refreshing hopes that the Federal Reserve Board will raise interest rates again. Higher rates increase the dollar’s value.
Meanwhile, Mexico’s economic austerity program, announced Thursday, was met with enthusiasm in Latin American and U.S. financial markets. The Mexican peso surged and the stock markets in Mexico and the United States rallied, pushing the Dow Jones industrial average up 52.22 points to a record 4,035.61.
Renewed confidence in Mexico, American’s third largest trading partner, had a calming effect on the dollar, which plunged in highly volatile trading this week.
``The market is eased in its worry that the dollar would have continued to fall out of control with no support,″ said Hillel Waxman, chief foreign exchange dealer at Bank Leumi Trust Co. in New York.
In late New York trading, the dollar was quoted at 91.09 Japanese yen, up from 90.50 late Thursday. In London, the dollar fetched 91.20 yen, up from 90.50.
The dollar also was changing hands in New York at 1.4155 German marks, up from 1.3945. In London, the dollar traded at 1.4115 marks, up from 1.3935.
Fed officials had hinted at midweek that the central bank would unertake another round of buying to support the dollar and many traders were looking for signs of an intervention Friday.
The Fed did not buy dollars, but the currency remained firm, supported by higher U.S. bond prices and the stock market rally.
Wall Street welcomed the stronger-than-expected jobs report. The unemployment rate dropped to 5.4 percent last month after jumping to 5.7 percent in January. It equaled the December rate, the lowest since July 1990.
Still, traders viewed Friday’s dollar’s ascent as a temporary correction, saying the outlook for the currency remains negative. The dollar will come under pressure against the yen ahead of repatriation of capital by Japanese companies through the end of March, when Japan’s fiscal year ends.
``The dollar is extremely vulnerable to the downside,″ said Earl I. Johnson, vice president and corporate adviser at Harris Trust and Savings Bank in Chicago.
Other late dollar rates in New York, compared with late Thursday: 1.1828 Swiss francs, up from 1.1650; 5.0455 French francs, up from 4.9095; 1,677 Italian lire, up from 1,658; and 1.4075 Canadian dollars, down from 1.4095.
The British pound was quoted at $1.5700, down from $1.6120. In London, the pound fell to $1.5805 from $1.6155 late Thursday.