Dollar rebounds after Friday's selloff; bonds mixed. - Mar. 7, 2005
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Dollar struggles back

Investors question if Friday's jobs-inspired selloff was too much; bonds mixed.
March 7, 2005: 9:55 AM EST
NEW YORK (CNN/Money) - The dollar bounced back early Monday after tumbling over
one percent against the euro Friday in response to a government report that showed
inflation was less of a problem than traders had bet.
The euro bought $1.3192 early Monday, down from $1.3239 late Friday. The dollar bought
¥105.26, up from ¥104.75 late Friday.
Friday, the Labor Department reported that there was a net gain of 262,000 jobs, higher than
the 225,000 expected.
But all of the details were not as strong as the headline number suggested. The unemployment
rate rose to 5.4 percent in February from January's 5.2 percent. The length of the average
workweek was unchanged at 33.7 hours, and so were hourly earnings at $15.90, after a five-
cent gain in January.
"People are still digesting Friday's data and wondering whether the short-term reaction to sell
the dollar was right," said Lee Ferridge, senior proprietary trader at Rabobank.
"After all, it wasn't a bad number. It's just that the market had positioned for something even
better."
Traders were expecting to see stronger signs of inflationary pressure, which would in turn
encourage the Federal Reserve to raise interest rates. Rising interest rates generally boost the
greenback, as foreign investors rush to purchase higher-yielding U.S. securities.
In Treasuries, the benchmark 10-year note gained 1/32 of a point to 97-15/32 to yield 4.32
percent.
The 30-year bond gained 11/32 of a point to 111-4/32 to yield 4.63 percent, down from 4.65
percent late Friday. Bond prices and yields move in opposite directions.
The five-year note slipped 2/32 of a point to yield 3.98 percent, while the two-year note edged
down to yield 3.59 percent.


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