×

Dollar gains as investors see Fed rate hike later this year

Xaume Olleros | Bloomberg | Getty Images

The U.S. dollar gained on Friday, erasing earlier losses, as investors viewed the Federal Reserve as still likely to raise interest rates in the coming months, despite disappointing jobs growth in August.

Hawkish statements from Fed Chair Janet Yellen and Vice Chair Stanley Fischer last week increased expectations before the jobs data that the U.S. central bank is closer to raising rates.


Most investors see a rate increase at the Fed's policy meeting later this month as a long shot, with the December meeting seen as the most likely time for a hike this year.

"The jobs data is not weak enough to get people to give up on their Fed view," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

Nonfarm payrolls rose by 151,000 jobs last month, the Labor Department said on Friday, below the 180,000 jobs that economists had expected.

The dollar index, which measures the greenback against a basket of six major currencies, rose 0.22 percent to 95.88, after earlier falling to 95.189, the lowest level since last Friday.

The greenback also jumped 0.62 percent to 103.90 yen, the highest level since July 29.

The dollar's reaction reflected low expectations that the Fed would hike in September, despite the more bullish tone taken recently by Fed officials.

"There was a degree of trepidation going into the numbers that we may not get the validation for a rate hike that the rhetoric would argue for," said Daragh Maher, head of FX strategy, U.S., at HSBC in New York.