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Dollar Slips After Grim U.S. Nonfarm Payrolls Data

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The U.S. dollar depreciated against its major opponents in the European session on Friday, as tepid nonfarm payrolls data in January triggered worries about the labor market recovery from the coronavirus pandemic.

Data from the Labor Department showed that U.S. employment rose less than expected in the month of January.

The report said non-farm payroll employment edged up by 49,000 jobs in January after plunging by a revised 227,000 jobs in December.

Economists had expected employment to rise by about 50,000 jobs following the loss of 140,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate slid to 6.3 percent in January from 6.7 percent in December. The unemployment rate was expected to come in unchanged.

Data from the Commerce Department showed that the U.S. trade deficit narrowed in the month of December, as the value of exports jumped by more than the value of imports.

The Commerce Department said the trade deficit narrowed to $66.6 billion in December from a revised $69.0 billion in November.

Economists had expected the trade deficit to shrink to $65.7 billion from the $68.1 billion originally reported for the previous month.

On the stimulus front, the U.S. Senate has approved a budget resolution, allowing Democrats to move forward with the budget reconciliation process to pass the $1.9 trillion coronavirus aid bill.

With the Senate split 50-50 between Democrats and Republicans, Vice President Kamala Harris' vote has broken the deadlock over passage of the budget plan. The plan was sent to the House of Representatives for final approval.

The greenback firmed in the Asian session, as hopes for a massive fiscal stimulus lifted longer-term U.S. Treasury yields.

The greenback fell 0.6 percent to 1.2024 against the euro, after rising to more than a 2-month high of 1.1952 at 10:00 pm ET. The EUR/USD pair was worth 1.1961 when it closed deals on Thursday. Next key support for the greenback is likely seen around the 1.22 level.

Data from Destatis showed that German factory orders declined more than expected in December.

Orders were down 1.9 percent on month, reversing a 2.7 percent rise in November and was also bigger than the economists' forecast of -1 percent.

The greenback lost 0.5 percent to 0.9005 against the franc, following more than a 2-month high of 0.9046 set at 10:00 pm ET. At yesterday's trading close, the pair was quoted at 0.9042. The greenback is likely to challenge support around the 0.88 region, if it drops again.

The greenback was down by 0.4 percent against the pound, at a 4-day low of 1.3719. The pound-greenback pair had ended yesterday's trading session at 1.3670. Continuation of the greenback's downtrend may lead it to a support around the 1.41 region.

Data from Halifax and IHS Markit showed that UK house prices declined for the first time in six months in January.

House prices fell 0.3 percent on month in January after remaining unchanged in December. This was the first decline since May and the biggest fall since April last year. Economists had forecast prices to climb 0.3 percent.

The greenback reached 0.7644 against the aussie, falling from a 3-day high of 0.7583 seen at 10:00 pm ET. The greenback was worth 0.7599 per aussie at Thursday's New York session close. Further drop in the currency may challenge support around the 0.78 region.

After a 3-day gain to 0.7136 at 9:45 pm ET, the greenback turned lower against the kiwi, touching 0.7189. At Thursday's close, the pair was valued at 0.7155. Immediate support for the dollar is likely seen around the 0.74 level.

The greenback pulled back to 1.2781 against the loonie, from a high of 1.2833 it recorded at 12:00 am ET. The currency was trading at 1.2825 against the loonie at yesterday's close. Should the greenback falls further, it is likely to face support around the 1.25 region.

The greenback eased off slightly to 105.43 against the yen, after having climbed to near a 4-month high of 105.77 at 8:20 am ET. The pair had closed Thursday's deals at 105.50. The greenback is seen facing support around the 102.00 level.

Preliminary data from the Cabinet Office showed that Japan's leading index declined in December after rising in the previous month.

The leading index, which measures the future economic activity, fell to 94.9 in December from 96.1 in November. In October, the reading was 94.2.

The U.S. consumer credit for December will be out in the New York session.

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