Dollar Rallies on Strong Data

By Chelsey Dulaney Features Dow Jones Newswires

The U.S. dollar rallied Thursday after a better-than-expected monthly employment report boosted confidence in the U.S. labor market.

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The WSJ Dollar Index, which measures the U.S. currency against 16 others, rose 0.3% to 88.74. The dollar rose 0.5% against the Japanese yen but was mixed against emerging-market currencies.

Hiring at private U.S. employers increased in May at the fastest pace since 2014, payroll processor Automatic Data Processing Inc. said Thursday. The strong private-sector data boosted expectations for Friday's government payrolls report for May.

The ADP data "will raise expectations of a similarly big gain in the official nonfarm employment figures, due out this Friday," said Capital Economics in a research note.

The Labor Department's monthly jobs report is viewed by many as the best read on the health of the U.S. labor market.

Separately, a report Thursday showed initial jobless claims, a proxy for layoffs across the U.S., rose to 248,000 in the week ended May 27. That was the highest level in five weeks.

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An Institute for Supply Management index showed U.S. manufacturing activity edged higher in May.

Investors are watching U.S. data closely for signs that the economy remains on solid footing as the Federal Reserve proceeds with interest-rate increases.

Fed-funds futures, used by investors to bet on the U.S. interest-rate outlook, show a 91% chance that the Fed raises rates at its June 13-14 meeting, according to CME Group data

Higher rates boost the dollar by making U.S. assets more attractive to yield-seeking investors.

Oil-dependent currencies were as a modest rebound in crude prices reversed in afternoon trading. The dollar rose 0.2% against the Canadian dollar but fell 0.4% against the Russian ruble.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

(END) Dow Jones Newswires

June 01, 2017 16:29 ET (20:29 GMT)