May 4, 2018 / 2:20 PM / a year ago

FOREX-Dollar hits 2018 high despite weaker jobs data

    * Dollar jumps to highest levels this year
    * Short covering seen boosting the rally

 (Adds quotes, updates prices)
    By Karen Brettell
    NEW YORK, May 4 (Reuters) - The U.S. dollar leaped to its
highest levels this year against a basket of currencies on
Friday, despite disappointing U.S. employment data for April.
    The U.S. economy added fewer jobs than expected and although
the unemployment rate dropped to near a 17-1/2-year low of 3.9
percent, this was because some jobless Americans left the labor
    Average hourly earnings rose 4 cents, or 0.1 percent, last
month after gaining 0.2 percent in March. That left the annual
increase in average hourly earnings at 2.6 percent.
    "It is probably a pause, but it is nothing to stop the
market," said Steven Englander, head of research and strategy at
Rafiki Capital in New York.
    The data came after the Federal Reserve was also seen as
adopting a more dovish tone at the conclusion of its meeting on
    "I think next week we are going to see a bunch of Fed
speakers expressing confidence in the economy, basically telling
the market that they drew the wrong conclusion from the
statement," Englander said.
    The dollar index jumped to 92.90, the highest level
since Dec. 28. The greenback also broke above parity with the
Swiss franc, rising as high as 1.0022 francs.
    The dollar has gained as investors bet that the Federal
Reserve will continue raising rates while other central banks
including the European Central Bank (ECB) will act more slowly.
    "The story in the last few days has been the disappointment
over the ECB and the UK to start raising interest rates in the
wake of the Fed and unless we see data picking up meaningfully,
the dollar will outperform in the coming weeks," said Gavin
Friend, senior markets strategist at NAB in London.
    The sharp rise in the dollar in recent weeks - it broke
above a 200-day moving average this week for the first time in a
year - took hedge funds and other investors by surprise. They
had built up record short bets on the dollar and were forced to
cover some of those positions, lifting the greenback even more.
    Erik Nelson, a currency strategist at Wells Fargo in New
York, sees further upside in the greenback as likely limited,
however, saying that pessimism over other economies may be
    “I think the economies are strong enough in those countries
to keep central banks on track to keep normalizing monetary
policy,” Nelson said.

    Currency bid prices at 10:00AM (1400 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1924        $1.1987     -0.53%         -0.60%      +1.1995     +1.1912
 Dollar/Yen       JPY=        109.1600       109.1800    -0.02%         -3.12%      +109.2300   +108.6600
 Euro/Yen         EURJPY=     130.19         130.89      -0.53%         -3.69%      +130.9300   +129.9000
 Dollar/Swiss     CHF=        1.0010         0.9974      +0.36%         +2.74%      +1.0022     +0.9970
 Sterling/Dollar  GBP=        1.3501         1.3574      -0.54%         -0.08%      +1.3586     +1.3488
 Dollar/Canadian  CAD=        1.2886         1.2844      +0.33%         +2.46%      +1.2917     +1.2836
 Australian/Doll  AUD=        0.7506         0.7529      -0.31%         -3.78%      +0.7560     +0.7493
 Euro/Swiss       EURCHF=     1.1938         1.1960      -0.18%         +2.13%      +1.1974     +1.1937
 Euro/Sterling    EURGBP=     0.8831         0.8830      +0.01%         -0.59%      +0.8836     +0.8816
 NZ Dollar/Dolar  NZD=        0.6998         0.7040      -0.60%         -1.23%      +0.7052     +0.6995
 Dollar/Norway    NOK=        8.0834         8.0460      +0.46%         -1.51%      +8.1015     +8.0435
 Euro/Norway      EURNOK=     9.6406         9.6453      -0.05%         -2.11%      +9.6575     +9.6307
 Dollar/Sweden    SEK=        8.8441         8.8122      -0.14%         +7.83%      +8.8628     +8.7998
 Euro/Sweden      EURSEK=     10.5490        10.5640     -0.14%         +7.22%      +10.5769    +10.5469
 (Reporting by Karen Brettell; Additional reporting by Saikat
Chatterjee in London and Dan Bases in New York; Editing by Steve
Orlofsky and Chizu Nomiyama)
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