The US dollar had another strong day yesterday, making notable gains against the majority of its major partners. One exception was against sterling, which saw early gains to the strongest in three weeks erased throughout the afternoon to remain little changed over the day. The US currency gained strength thanks to a number of areas that showed support for the overall economic outlook. Support came from the election results stateside, where the Republican Party won the majority, and thus control of the Senate. This helped the currency at first, with some investors believing that they have a better grip on the economy.
Data from the independent non-farm employment change also boosted the dollar, as it came in better than expected. With the figure showing that employers had added more jobs than forecast, the dollar reached its highest in seven years against the Japanese yen, as the labour market is crucial in the battle for interest rate rises. This positive figure added more speculation that such a rise could happen sooner rather than later, despite a less than impressive non-manufacturing index.
Today keeps the labour market in focus, with the overall unemployment claims figure as the main release for the day. Some smaller pieces could again support this, as well as words from a member of the US Federal Reserve later in the day.