U.S. Dollar Rallies Ahead of Employment Data

NEW YORK (TheStreet) -- Ahead of Friday's always-important nonfarm payrolls data (NFP), there were estimates released Wednesday by analysts the report might show an increase for labor on payrolls in March. This estimate came to increase the already growing sentiment that the Federal Reserve is having an early view on raising interest rates.

After last month's FOMC meeting and during her first press conference as Fed chairman, Janet Yellen stated  the Federal Reserve might end its monthly quantitative easing this autumn and could begin raising interest rates six months after that. The initial $85 billion monthly QE program is being trimmed by the Fed on a regular basis by $10 billion reductions since December 2013, and the last one was decided during the latest FOMC meeting.

As of this month, the asset purchasing program will be $55 billion until further reduction by the Fed.

The NFP is a report released by the U.S. Department of Labor shows monthly additions or reductions of people on payrolls. Even though NFP has been traditionally viewed by the Fed as a benchmark for shifting the interest rates when the unemployment rate reduces to 6.5%, Janet Yellen said that other economic data such as general conditions in the labour market, inflation readings and also conditions in the financial markets will also be of significance.

There is optimism for a stronger U.S. economy, and it's already evident by the recent surge of the dollar against the yen as the USD/JPY is trading on a two-month high, with back-to-back increases for the last five days. The U.S. dollar increased against the yen by 1.8% since March 27.

If you liked this article you might like

Markets Favor U.S. Dollar in Wake of Fed Meeting

Wheat Futures Rally, but Uncertainty in Ukraine Makes Prices Volatile

Get Your Forex Trading Insights With Chart Patterns