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Dollar Dips As Substantial Slowdown In U.S. Job Growth Raises Fed Rate Cut Hopes

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The U.S. dollar fell sharply against its major counterparts in the European session on Friday, as a sharp slowdown in U.S. job growth in May fueled speculation that the Federal Reserve would cut interest rate sooner rather than later.

Data from the Labor Department showed that employment rose by 75,000 jobs in May after soaring by a downwardly revised 224,000 jobs in April.

Economists had expected employment to increase by about 185,000 jobs compared to the jump of 263,000 jobs originally reported for the previous month.

The unemployment rate came in at 3.6 percent in May, unchanged from the previous month and in line with economist estimates.

The data pointed to a substantial slowdown in U.S. economy, prompting a number of economists to bet at least two rate cuts by the Fed this year.

The U.S. treasury yields also fell, with the benchmark yield on 10-year note falling 2.07 percent, while that of 2-year equivalent was down by 1.8 percent. Yields move inversely to bond prices.

Weak data, continued trade tensions and comments from Fed officials fueling hopes for interest rate cuts undermined the currency this week.

The greenback climbed against its major counterparts in the Asian session, excepting the pound.

The greenback depreciated to 1.2753 against the pound, its weakest level since May 21, and recorded a 0.5 percent slide from a high of 1.2687 seen at 5:00 pm ET. The pair closed Thursday's deals at 1.2688. Extension of the greenback's downtrend may lead it to a support around the 1.30 level.

Data from the Lloyds Bank subsidiary Halifax and IHS Markit showed that UK house prices increased at a slower pace in May.

House prices grew only 0.5 percent month-on-month in May after gaining 1.2 percent in April. Nonetheless, this was the second consecutive rise in prices and above the forecast of flat growth.

The greenback lost 0.6 percent to hit near a 2-month low of 1.1324 against the euro, following a high of 1.1251 touched at 6:00 am ET. The euro-greenback pair was valued at 1.1276 when it ended deals on Thursday. Next key support for the greenback is possibly seen around the 1.15 mark.

Figures from Destatis showed that Germany's exports and imports declined markedly in April.

Exports decreased by seasonally adjusted 3.7 percent month-on-month in April, in contrast to a 1.6 percent rise in March. Shipments were forecast to drop 0.9 percent.

After rising to a weekly high of 108.62 against the yen at 6:00 am ET, the greenback pulled back to touch a 2-day low of 107.88 following the data. This represented a 0.5 percent slide from yesterday's New York session close of 108.39. Further downtrend is likely to see the greenback challenging a support around the 106.00 level.

Data from the ministry of Communications and Internal Affairs showed that Japan household spending rose 1.3 percent on year in April, coming in at 301,136 yen. That missed expectations for an increase of 2.7 percent and was down from 2.1 percent in March.

The U.S. currency fell to a 2-day low of 0.9862 against the franc, down by 0.9 percent from a high of 0.9950 recorded at 6:00 am ET. The greenback had finished yesterday's trading at 0.9912 against the franc. Should the greenback extends its downtrend, 0.96 is likely seen as its next support level.

Having climbed to 0.6964 against the aussie at 6:00 am ET, the greenback moved down, falling 0.5 percent to a 2-day low of 0.7000. At yesterday's close, the pair was quoted at 0.6976. The greenback may test support around the 0.715 level, if it drops again.

The greenback was 0.7 percent lower at a 2-day low of 0.6663 against the kiwi, reversing from a 2-day high of 0.6614 that it had seen at 9:30 pm ET. The pair was worth 0.6620 at yesterday's New York session close. The currency is seen finding support around the 0.68 region.

The greenback slid to 1.3296 against the loonie, a level unseen since April 17. The greenback was trading at 1.3362 a loonie at yesterday's close. The currency is likely to target support around the 1.30 area.

The U.S. consumer credit for April is due at 3:00 pm ET.

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