The US dollar rose against a basket of currencies on Friday after the US released a better than expected employment report, indicating that the employment market is tightening, which may make the Federal Reserve continue to raise interest rates aggressively. On Friday, the US dollar index closed up 0.41% to 102.18. In the morning trading of Asian markets on June 6, Beijing time, the US index fluctuated in a narrow range and is currently trading near 102.10.

In a closely watched employment report released last Friday, the U.S. Department of labor said that 390000 non farm jobs were added in May. Economists surveyed by Reuters had previously estimated that the number of jobs in the United States increased by 325000 in May., The number of non-agricultural employment increased by 390000 last month, which was revised to increase by 436000 in April.

After the employment report was released, the US dollar index, which tracks the trend of the US dollar against six other major currencies, once rose to a high of 102.22. The dollar index rose about 0.5% last week.

The Federal Reserve has raised interest rates by 0.75 percentage points this year, and most Federal Reserve policymakers support raising interest rates by 0.5 percentage points at the next two meetings.

Cleveland Fed chairman mester said on Friday that she would look for "convincing" evidence that inflation had peaked before supporting a slower pace of interest rate hikes. Policymakers said the Federal Reserve may raise interest rates by 50 basis points in June and July respectively.

Investors have different views on the US dollar, which is still close to a 20-year high against a basket of currencies.

George saravelos, global head of foreign exchange research at Deutsche Bank, said that the US dollar "priced at a very extreme risk aversion premium, which rarely lasts. At present, investors are lifting such positions."

Optimistic analysts believe that the tightening cycle of the Federal Reserve is based on the fact that the economic growth of the United States is stronger than that of Europe, especially after the embargo on Russian oil, which may damage the economy of the eurozone.

On Friday, the dollar rose more than 0.9% against the yen to 130.97, a three-week high. The yen was not far from the 20-year low hit in May, as the Bank of Japan insisted on its ultra-low interest rate policy position. The dollar against the yen then narrowed slightly, rising 0.74% to 130.81.

Tokuhiko Kuroda, chairman of the Bank of Japan, said on Friday that he was not happy to see prices rise too fast in the context of weak household income growth. He once said that the bank would not withdraw its large-scale monetary stimulus measures, because the recent rise in inflation was mainly driven by the rise in raw material costs, which may be temporary.

"Everyone, including the European Central Bank, is talking about raising interest rates, but when it comes to the Bank of Japan, we don't see such a discussion. I think that's why you see such an exaggerated downward trend in the yen," Trang added.

Last Friday, the euro wiped out the gains made earlier in the day and closed down 0.27% at 1.0716. Traders are now betting that the European Central Bank will raise interest rates by 50 basis points by October, which was previously expected to be so much by the end of the year.

Last Friday, the dollar rose 0.68% against the Swiss Franc to 0.9642, and finally closed up 0.54% to 0.9626; If it falls below the low of 0.9545 on May 27, it may further fall to the lowest since April 22.

As the world's largest digital currency by market value, bitcoin is still difficult to get rid of selling pressure and remains below $30000.

Institutional Perspective

Fxstreet: it is expected that the European Central Bank will announce this week that it will end its asset bond purchase program within a few weeks, and send a strong signal that the interest rate hike will come in July and September (in this sense, October is still a more noteworthy meeting). Inflation is expected to be stronger and economic growth weaker, highlighting the challenges facing the European Central Bank in the future

Nordic Bank of Sweden: high inflation may prompt the European Central Bank to raise the deposit rate by 50 basis points in July

Inflation in the eurozone is still rising, which may prompt the European Central Bank to consider raising interest rates by 50 basis points in July. Strategists believe that the adjusted annual CPI rate in June will rise to 8.8% from 8.1% in May, which may be enough to urge most people in the European Central Bank Management Committee to advocate raising interest rates by 50 basis points in July, so as to immediately withdraw from negative interest rates. Nordic Bank of Sweden predicts that the deposit rate of the European Central Bank (currently -0.50%) will be raised to 0.75% by the end of the year, and the refinancing rate will be raised from 0% to 1%.

Simon macadam, senior global economist at Kaitou macro: weak global demand is dragging down global trade

After experiencing blowout growth at the end of last year, Global trade stagnated in the first quarter. The conflict between Russia and Ukraine has raised concerns that new supply bottlenecks will block Global trade. However, the recent weakness in Global trade seems to be caused by weak demand rather than limited supply. The latest trade data is in line with the slowdown in global economic growth. Kaitou macro predicts that external demand will weaken further, which will damage Global trade in the coming months.

Dow Jones Securities: the strong non farm employment data is unlikely to change the general environment of the Federal Reserve

Employment continued to grow strongly by 390000 in May. The unemployment rate remained unchanged at 3.6% for the second consecutive month. The average hourly monthly rate was stable at 0.3%, but continued to decline year-on-year. This report will not change the price trend of the foreign exchange market, but it does mean that the better the data, the more difficult it will be to advocate slowing down the pace of interest rate hikes later this year. However, what the report did was to delay to a minimum, and even weaken the prematurely prevailing bias to sell the dollar.