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Dollar rise, US jobs gain backs US rate hike case

New York - The dollar rose, rebounding from Thursday’s selloff, after a US employment report bolstered speculation that the Federal Reserve will raise interest rates this month.

The greenback advanced against most of its major peers after Labour Department data showed US payrolls increased by 211 000 in November, versus estimates for a gain of 200 000 in a Bloomberg survey of economists.

The jobless rate held at 5%, a seven year low. Fed chair Janet Yellen said on Thursday that policy makers will look carefully at the report without placing too much weight on one set of indicators.

"It is US dollar-positive at the margin as it ups the odds of a hike on December 16," said John Hardy, head of foreign- exchange strategy at Saxo Bank A/S in London. Even still, the data are "insufficiently impressive to move the needle on the anticipated pace of Fed hikes."

The Bloomberg Dollar Spot Index added 0.5% to 1 225.20 as of 15:43. The index tumbled 1.4% on Thursday after the European Central Bank’s expanded stimulus programme trailed expectations.

The greenback gained 0.6% to $1.0879 per euro and advanced 0.5% to ¥123.19.

Traders saw a 78% probability that the Fed would raise its benchmark rate at its next meeting, according to futures data compiled by Bloomberg. The calculation assumes the effective fed funds rate averages 0.375% after the first increase.

Yellen delivered a cautiously upbeat outlook for the US economy this week, signaling the conditions necessary for an interest-rate increase have been met and that she hopes to tighten monetary policy slowly after liftoff.


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