Dollar Rebounds After U.S. Nonfarm Payrolls Data
06 January 2017 - 8:37PM
RTTF2
The U.S. dollar trimmed its losses against its major
counterparts in the European session on Friday, as the U.S. wage
growth accelerated to the most since 2009, despite slowing job
growth last month.
Data from the Labor Department showed that non-farm payroll
employment climbed by 156,000 jobs in December, while economists
had expected an increase of about 175,000 jobs.
While the increase in employment in November was upwardly
revised to 204,000, the increase in employment in October was
downwardly revised to 135,000, reflecting a net addition of 19,000
jobs.
The report also said the unemployment rate inched up to 4.7
percent in December from 4.6 percent in November, matching
economist estimates.
Additionally, the Labor Department said the annual rate of
growth in average hourly employee earnings accelerated to 2.9
percent from 2.5 percent.
U.S. treasury yields also rose, with the benchmark yield on
10-year note rising 2.41 percent and that of 2-year equivalent was
up by 1.21 percent. Yields move inversely to bond prices. A
separate report from the Commerce Department showed that the U.S.
trade deficit widened more than expected in November, as imports
rose and exports fell.
The report said the trade deficit widened to $45.2 billion in
November from a revised $42.4 billion in October. The trade deficit
had been expected to widen to $44.5 billion.
Investors await factory orders and durable goods orders data due
shortly, for more indications about the economic outlook.
The greenback was lower on Thursday as the Fed minutes signaled
uncertainty about the impact of Trump's fiscal policies on the
economy and as data showed that private payroll growth slowed in
December.
The currency fell 1.13 percent against the euro, 1.6 percent
against the yen, 1.1 percent against the Swiss franc and 0.7
percent against the pound for the day.
The greenback that declined to a weekly low of 1.0622 against
the euro in the immediate aftermath of the data rebounded to 1.0546
soon afterwards. The greenback is seen finding resistance around
the 1.03 mark.
Survey results from European Commission showed that Eurozone
economic confidence strengthened to the highest level in more than
five years in December.
The economic sentiment index improved to 107.8 in December from
106.6 in November. This was the highest since March 2011, when the
reading was 108.3.
The greenback climbed to 116.44 against the Japanese yen,
following more than a 3-week low of 115.07 set early in the Asian
session. The next possible resistance for the greenback-yen pair is
seen around the 118.00 region.
Preliminary report from the Ministry of Health, Labor and
Welfare showed that Japan's total labor cash earnings in Japan
increased for the second straight month in November, in line with
expectations.
Gross earnings climbed 0.2 percent year-over-year in November,
following a 0.1 percent rise in October. The figure also matched
consensus estimate
Reversing from an early low of 1.0094 against the Swiss franc,
the greenback advanced to 1.0163. Continuation of the
greenback-franc's uptrend may see it challenging resistance around
the 1.03 level.
The greenback, having fallen to 1.2430 against the pound at 6:45
pm ET, reversed direction with the pair trading at 1.2330. If the
greenback extends rise, it may locate resistance around the 1.22
area.
The greenback bounced off to 0.7307 against the aussie and
0.6986 against the kiwi, from its previous low of 0.7355 and a
3-week low of 0.7043, respectively. On the upside, the greenback is
likely to challenge resistance around 0.70 against the aussie and
0.67 against the kiwi.
On the flip side, the greenback declined to more than a 3-week
low of 1.3179 against the loonie, as the latter was buoyed by
domestic economic data. Further weakness may take the greenback to
a support around the 1.30 mark.
Data from Statistics Canada showed that employment rose by
54,000 in December, defying expectations for a fall of 5,100 jobs.
In November, the employment increased by 10,700.
Looking ahead, at 11.15 am ET, Chicago Federal Reserve Bank
President Charles Evans discusses monetary policy on a National
Association for Business Economics and American Economic
Association conference panel in Chicago, with audience and media
Q&A.
Prepared remarks of Richmon Fed President Jeffrey Lacker on 2017
economic outlook will be presented at the Maryland Bankers
Association Forum in Baltimore by his Director of Research at 1.00
pm ET.
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