Dollar Depreciates As Weak U.S. Jobs Data Raises Hopes For QE Tapering Delay

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The U.S. dollar drifted lower against its major counterparts in the European session on Friday, as a sharp slowdown in the nation's job growth for August raised hopes that the Federal Reserve may delay the start of tapering of the bond purchase program.

Data from the Labor Department showed that U.S. job growth fell well short of economic estimates in the month of August.

The non-farm payroll employment rose by 235,000 jobs in August after soaring by an upwardly revised 1.053 million jobs in July.

Economists had expected employment to jump by about 750,000 jobs compared to the spike of 943,000 jobs originally reported for the previous month.

Despite the much weaker than expected job growth, the unemployment rate fell to 5.2 percent in August from 5.4 percent in July, matching economist estimates.

Senator Joe Manchin urged Democrats to pause their effort to pass a $3.5 trillion spending bill, citing concerns about inflation and debt.

In the Wall Street Journal opinion section, Manchin wrote that he would not support the $3.5 trillion package "or anywhere near that level of additional spending" ignoring the risks of inflation and debt on existing government programs.

The greenback showed mixed performance against its major peers in the Asian session. While it held steady against the franc, it rose against the yen. Versus the euro and the pound, it dropped.

The greenback lost 0.3 percent to touch a 5-week low of 1.1909 against the euro. The pair was worth 1.1875 when it closed deals on Thursday. Further drop in the currency may challenge support around the 1.21 level.

Final data from IHS Markit showed that Eurozone private sector logged another robust growth in August but the momentum faded slightly from July's 15-year peak.

The final composite output index fell to 59.0 in August from 60.2 in July, which was the highest since June 2006. The reading stood below the flash 59.5.

The greenback was 0.3 percent lower versus the pound, at over a 2-week low of 1.3867. The pound-greenback pair had ended yesterday's trading session at 1.3831. Should the greenback dips further, 1.40 is possibly seen as its next support level.

Final survey data from IHS Markit showed that the UK service sector growth weakened in August largely due to supply chain disruptions and the normalization of customer demand after the initial loosening of pandemic restrictions.

The Chartered Institute of Procurement & Supply final services Purchasing Managers' Index dropped to 55.0 from 59.6 in the previous month. The flash reading was 55.5.

The greenback weakened to a 3-day low of 0.9115 against the franc, down 0.3 percent on the day. At yesterday's trading close, the pair was quoted at 0.9143. Immediate support for the greenback is likely located around the 0.90 level.

The greenback fell 0.4 percent to a 3-day low of 109.63 against the yen, from a high of 110.07 it set at 11 pm ET. The pair had closed Thursday's deals at 109.91. The greenback is seen challenging support around the 106.00 level.

The latest survey from Jibun Bank showed that Japan services sector continued to contract in August, and at a faster pace, with a PMI score of 42.9.

That's down from 47.4 in July, and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

The greenback dropped to its lowest level since July 15 against the aussie, at 0.7478. The greenback was worth 0.7399 per aussie at Thursday's New York session close. The greenback may seek support near the 0.77 level.

Data from the Australian Bureau of Statistics showed that Australia retail sales fell a seasonally adjusted 2.7 percent on month in July- coming in at A$29.778 billion.

That was in line with expectations following the 1.8 percent decline in June.

The greenback reached 0.7166 versus the kiwi, a level unseen since June 11. At Thursday's close, the pair was valued at 0.7107. Further downtrend may take the greenback to a support around the 0.73 level.

The greenback depreciated to more than a 3-week low of 1.2493 against the loonie from yesterday's closing value of 1.2552. Extension of downward trading may see the greenback finding support around the 1.23 region.

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