Citi on Nonfarm Payrolls: The US Dollar Is Welcoming a Favorable Environment for an Increase

Golden Ten Data reported on June 5th that US employment data exceeded expectations, strengthening the US dollar, while progress in US-Iran peace talks has stalled. The US Dollar Index is set to post its largest gain since April 8 on Friday; it is up 0.6% this week, likely to mark the biggest increase in three months. While other regions around the world are struggling with high energy prices caused by the Middle East conflict, US employment growth in May exceeded market expectations and the unemployment rate remained stable. This employment data has reinforced market expectations for a Federal Reserve rate hike. “This is a favorable environment for the US dollar to rise,” said Noah Buffam, strategist at Citi Capital Markets. “The data indicates that the US exceptionalism theory has stood the test, with economic rebound achieved while inflation remains above target levels.”