CURRENCIES: Dollar Surges Against Rival Currencies After March Jobs Report

whiteman

Fri, Apr 6 2007, 14:30 GMT

By Ciara Linnane

The dollar surged against the other major global currencies Friday, rallying after the March jobs report showed the U.S. economy adding far more jobs than expected.

This raised the prospect that the Federal Reserve's next move on interest rates may be a further hike rather than a cut.

The dollar was quoted at 119.24 yen, compared with 118.71 yen late Thursday, while the euro stood at $1.3377 against $1.3426. The euro hit a two-year high against the dollar on Thursday.

The British pound traded at $1.9652 compared with $1.9706. The euro fetched 159.51 yen against 159.31 yen late Thursday.

Foreign-exchange volumes are expected to be light today with the U.S. stock market closed for Good Friday.

Job growth showed surprising strength last month, the Labor Department said. Nonfarm payrolls expanded by 180,000, higher than the 168,000 projected in a survey of economists by MarketWatch.

The unemployment rate also ticked down to 4.4% from 4.5% in February, running counter to expectations that the rate would remain unchanged.

The 4.4% jobless rate matches the lowest seen in six years, set in October. The last time the unemployment rate was lower was in May 2001.

Average hourly earnings increased 6 cents, or 0.3% to $17.22, matching economist expectations. Earnings are up 4.0% in the past year.

\"Strong employment growth indicates the economy continues to expand, despite the drop in new housing construction, slower productivity growth and tepid retail sales,\" said Peter Morici, a business professor at the University of Maryland and a former federal trade official.

The numbers are consistent with the consensus forecast for growth in first-quarter gross domestic product of 2.3%, he said.

Economists at research firm Action Economics agreed.

\"We remain concerned about the weak factory goods figures for January and February, but downside near-term risk to the economy has been reduced significantly by today's report,\" they said. \"Our Q1 GDP estimate has been raised to 2.0%, but with upside risk given the potential for similar bounces in other March reports.\"

(END) Dow Jones Newswires