Dollar advances as U.S. job growth tops expectations

The U.S. dollar edged higher against a basket of currencies on Friday, after a better-than-expected U.S. employment report pointed to a tight labor market that could lead the Federal Reserve going with interest rate hikes, according to Reuters.

Nonfarm payrolls increased by 390,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Economists polled by Financial Eye had forecast payrolls increasing by 325,000 jobs in May.

The U.S. Dollar Currency Index , which tracks the greenback against six other major currencies, was 0.2% higher at 101.91, after rising as high as 102.19 following the jobs report.

The Fed has raised interest rates by three quarters of a percentage point this year, and most Fed policymakers back raising interest rates another half of a percentage point at each of their next two meetings.

Calling high inflation the U.S. central bank’s “number one challenge,” Fed Vice Chair Lael Brainard on Thursday said she backs at least a couple more half-percentage-point interest rate hikes, with more on tap if price pressures fail to ease.

Investors have mixed views on the greenback, which is still close to two-decade highs against a basket of peers.