Forex - Dollar gains as U.S. June jobs report beats expectations

Investing.com - The dollar traded higher against most major currencies on Friday after official U.S. data revealed more hiring took place in June than expected, which refueled expectations that the Federal Reserve will taper its stimulus programs in the coming months.

Stimulus programs like the Fed's monthly USD80 billion asset-purchasing program weaken the dollar by flooding the economy with liquidity to push down borrowing costs, and talk of their dismantling can strengthen the greenback, often considerably.

In U.S. trading on Friday, EUR/USD was down 0.65% at 1.2831.

The Bureau of Labor Statistics reported earlier the U.S. economy added 195,000 nonfarm payrolls in June, well above analysts' calls for a 165,000 increase.

May's figure was revised upwards to 195,000 jobs from 175,000, while April's figure was revised upwards to 199,000 from 149,000.

The headline unemployment rate remained unchanged at 7.6% last month, while hourly earnings rose 0.4% compared to market calls for a 0.2% gain.

The numbers sent the dollar gaining by fueling sentiments monetary stimulus measures are on their way out by next year.

Today, the Federal Reserve is buying USD85 billion in Treasuries and mortgage securities each month to push down borrowing cross across the economy and drive recovery, a monetary policy tool known as quantitative easing that weakens the greenback and makes assets like stocks and gold attractive.

Past rounds of quantitative easing saw the Fed snap up USD1.7 trillion in mortgage assets from banks just after the 2008 financial crisis followed by a second round in 2011, in which the Fed bought USD600 billion in Treasury holdings and mortgage debt from banks.

The current and open-ended round, known widely as QE3, is expected to begin winding down later this year and end in 2014 if the economy continues to improve.

The greenback was up against the pound, with GBP/USD trading down 1.18% at 1.4894.

Bank of England Governor Mark Carney said earlier that interest rates may remain low for a while, which caught a few investors off guard and weakened the pound.

The dollar was up against the yen, with USD/JPY up 1.13% at 101.17, and up against the Swiss franc, with USD/CHF trading up 0.69% at 0.9634.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.58% at 1.0576, AUD/USD down 0.94% at 0.9058 and NZD/USD trading down 1.55% at 0.7710.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.89% at 84.70.

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