The dollar pared gains against the euro after New York Fed President William Dudley said not to be “overly optimistic about the growth outlook.”
Nonfarm payrolls rose by 216,000 in March and unemployment fell to a two-year low. The unemployment rate fell to 8.8 percent from 8.9 percent in February.
“We must not be overly optimistic about the growth outlook,” Dudley said. “A stronger recovery with more rapid progress toward our dual mandate objectives is what we have been seeking. This is welcome and not a reason to reverse course.”
The greenback dropped 5.5 percent against the euro in the first quarter as investors bet the European Central Bank will raise interest rates at the April 7 meeting and the Federal Reserve will fully carry out the $600 billion asset buying program through June.
Japan’s currency dropped to a 10- month low against the euro on speculation the Bank of Japan will lag behind its counterparts in raising interest rates. Currencies linked to U.S. growth, such as the Mexican peso and Canadian dollar, were the best performers against the dollar.
“We’re continuing to see the yen as one of the best ways of playing the positive reaction to this data,” said David Mann, the New York-based head of research in the Americas for Standard Chartered. “If you combine the data with the increasingly hawkish talk we’ve been getting recently from the Fed it could be raising expectations that Fed Chairman Ben S. Bernanke starts to be a little more upbeat in his comments which would be dollar-positive in the short term.”
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