Dollar weakens on payroll data

The dollar’s movement on Friday exhibited a conundrum as a much stronger than expected payrolls failed to inspire the reserve currency and instead led to a sharp sell off in the USD with the dollar closing the week at mid $1.32 levels against the euro.
The payrolls figure came out at 262k against a forecasted 220k but still the floor beneath the greenback’s feet slipped as the market’s whisper numbers had risen to 300k and thus the traders were disappointed with what they got. Both the services and the manufacturing sectors added sufficient jobs to give support to the view that the Fed will continue to raise rates to 3 percent by late summer this year.
Also depressing the dollar further was the University of Michigan consumer sentiment data, which came below consensus at 94.1 versus 94.5 expected, while the unemployment rate rose to 5.4 percent from the expected 5.2 percent.
In other news treasury officials stated that there was no indication yet that foreign central banks were diversifying away from US assets in a major way while Chinese premier also commented that China was taking necessary steps to reform the exchange rate mechanism of renminbi.