Dollar Rising On Better Than Expected Jobs Growth

06 Jul 2013

Immigration News

The dollar is currently gaining ground against all of its major competitors at the end of the trading week. The better than expected jobs growth for the month of June appears to be the driving force behind the U.S. currency's strength.

Employment in the U.S. increased by more than anticipated in the month of June, according to a report released by the Labor Department on Friday. The report said non-farm payroll employment increased by 195,000 jobs in June, matching the revised job growth seen in May.

Economists had been expecting employment to increase by about 165,000 jobs compared to the addition of 175,000 jobs originally reported for the previous month.

Despite the stronger than expected job growth, the unemployment rate came in unchanged at 7.6 percent. The unemployment rate had been expected to edge down to 7.5 percent.

European Central Bank President Mario Draghi said on Thursday that euro area interest rates are likely to remain low for an 'extended period' of time, a statement that was construed as a forward guidance about the policy path to markets that were rattled by the Portugal political crisis and the U.S. Federal Reserve's tapering announcement.

Germany's Finance Minister Wolfgang Schaeuble on Thursday brushed aside concerns that the political stalemate in Portugal will spark another round of crisis in Eurozone, reports said.

"The euro is seen as so stable by financial markets that even political situations and policies of individual countries don't mean a crisis for the euro as a whole," he said at a press conference following a loan deal between Germany and Spain.

"I don't think this will lead to a new euro crisis," the minister said. Schaeuble, nonetheless, said he regretted the resignation of Portuguese Finance Minister Vitor Gaspar.

Greek Finance Minister Yannis Stournaras said Thursday that the talks with the country's international lenders on the next bailout payment can be concluded by July 8, ahead of a meeting of Eurozone finance ministers.

"There was progress on all issues," and a political agreement is most likely to be reached by Monday, Stournaras was quoted as saying after a meeting between him and Prime Minister Antonis Samaras.

The International Monetary Fund has warned that possible policy slippages, including at the European level, may pose downside risk to Italy's economic outlook and could undermine market confidence in the sovereign.

Any backtracking on the policy could also intensify funding pressures on the banks and tighten credit, the Washington-based lender said in a regular review report on Thursday.

The dollar has added to yesterday's gains against the Euro on Friday, rising to a month and a half high of $1.2805, from Thursday's high of $1.2882.

German factory orders declined unexpectedly in May, largely due to subdued demand from the euro area, mirroring fragility in the nascent recovery in the largest Eurozone economy. The decline in turn potentially damped hopes of a recovery seen at the end of this year in the 17-nation bloc.

Factory orders slipped 1.3 percent from a month ago, when it declined by a revised 2.2 percent, a report from the Federal Ministry of Economics and Technology showed Friday. This was the second consecutive fall in orders. Although the decline was in contrast to the 1.2 percent growth expected by economists, the pace of decline slowed from April.

The French trade deficit increased significantly in May due to a notable decline in exports, data from customs office showed Friday. The trade gap widened to EUR 6.01 billion in May from EUR 4.48 billion in April. The shortfall was forecast to increase to EUR 4.6 billion.

In an unusual step, Bank of England policymakers issued a statement with a no-change decision on Thursday. The bank said the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.

The greenback has also extended yesterday's gains against the pound sterling Friday, breaking out to $1.4855, its highest level since March 11.

The buck dipped to an early low of Y99.879 against the Japanese Yen Friday morning, but has since climbed to over a 1-month high of Y101.129.

A leading indicator of Japan's business conditions grew faster than expected in May, preliminary data released by the Cabinet Office showed Friday. The composite leading index rose to 110.5 in May from an upwardly revised 107.7 in April and 106.2 in March.



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