US Dollar Recovers After Jobs Data
Frankfurt (Sep 4) The US dollar erased its losses against its major opponents on Friday, after the release of mixed jobs data for August, which kept alive hopes for a September rate hike by the Federal Reserve.
The Labor Department released a report showing much weaker than expected US job growth in the month of August, but the unemployment rate fell to a new seven-year low.
The non-farm payroll employment climbed by 173,000 jobs in August, well below the increase of 220,000 jobs anticipated by economists.
However, the report also showed upward revisions to the job growth seen in both June and July, with the revised data showing increases of 245,000 jobs in each month.
The report also said the unemployment rate edged down to 5.1% in August from 5.3% in July, hitting its lowest level since April of 2008.
In a speech in Richmond, Jeffrey Lacker , president of the Richmond Fed, wants to raise interest rates no matter what the August jobs report tells us.
"I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring," Lacker said.
Finance ministers and central bankers from the Group of 20 nations are meeting in Turkey , where they will discuss the prospectus of higher US rates and its uneasiness in emerging markets that trigger capital outflows and currency volatility.
"In line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies, which may remain one of the main sources of uncertainty in financial markets," the draft communique showed.
In the Asian session, the greenback dropped against the yen, euro and the franc but advanced against the pound.
In European trading, the greenback bounced off to 0.9765 against the franc and 119.62 against the yen, from an early low of 0.9686 and a 9-day low of 118.60, respectively. Further gains may lead the greenback to resistance levels of around 0.985 against the franc and 120.7 against the yen. The greenback finished Thursday's deals at 0.9733 against the franc and against the yen.
Reversing from an early low of 1.5277 against the pound, the greenback appreciated to a 3-month high of 1.5207. The pair was valued at 1.5255 at Thursday's close. The greenback is seen finding resistance around the 1.50 level.
The greenback edged up to 1.1090 against the euro, following a decline to 1.1188 in the aftermath of the data. If the greenback continues rise, it is likely to challenge resistance around the 1.10 mark. At yesterday's close, the pair was valued at 1.1122.
Data from Destatis showed that Germany's factory orders declined most in six months on weak foreign bookings in July, while domestic demand remained robust.
Factory orders dropped 1.4% in July from a month ago, which was the biggest fall since January when they slid 2.6%.
The greenback advanced to a 2-day high of 0.6318 against the kiwi and a 6-1/2-year high of 0.6928 against the aussie, coming from its previous lows of 0.6400 and 0.7021, respectively. The greenback is poised to challenge resistance around 0.61 against the kiwi and 0.68 against the aussie. The greenback was trading at 0.6397 against the kiwi and 0.7017 against the aussie when it closed yesterday's deals.
Source: RTTnews
