News Column

Upbeat Jobs Data Lifts Up US Dollar

July 3, 2014

CANBERA (Alliance News) - The US dollar gained ground against its key counterparts in early New York deals on Thursday, as robust jobs data for June brightened outlook over the strength of the US labor market.

The data by the Labor Department showed an addition of 288,000 jobs in June, notably higher than an expected addition of 211,000 jobs. Meanwhile, jobless rate fell to a near six-year low of 6.1%. Economist expected unemployment rate to remain unchanged at 6.3%.

Another report from the Labor Department showed jobless claims to have risen to 315,000 in the week ended June 28th. The consensus estimate called for a rise to 314,000 from 312,000 in the previous week.

The US trade deficit fell more than expected by 5.6% in May to USD44.4 billion data, according to data released by the US Commerce Department. Economists expected the trade deficit to have narrowed to USD45.1 billion from USD47.2 billion in the previous month.

The jobs data, which came on the heels of upbeat private sector employment data, signaled that the economic recovery in US is gathering momentum in the second quarter.

The greenback extended rally to 102.22 versus the yen, its highest since June 18, and was higher by 0.5% from 101.75 hit late New York Wednesday. Continuation of bullish trend may lead the greenback to a resistance around the 103.00 mark.

Japan's service sector activity declined further in June, results of a survey by Markit Economics showed.

The Markit Japan Services PMI edged down to 49.0 in June from 49.3 in May, signaling contraction for the third consecutive month. The decrease in service sector output was driven by the recent increase in sales tax, the survey showed.

The greenback firmed to a 1-week high of 1.3607 against the euro and a 6-day high of 0.8928 against the franc, compared to Wednesday's closing values of 1.3658 and 0.8887,respectively. If the greenback extends gain against the euro and the franc, it is likely to face resistance around 1.35 and 0.90, respectively.

The greenback rallied to a 2-day high of 1.7098 against the Sterling, after having fallen to a 5-1/2-year low of 1.7176 on Wednesday. The greenback may possibly test resistance at the 1.70 zone.

UK service sector activity continued to strengthen in June, albeit at a slower rate than expected, results of a survey by Markit Economics and the Chartered Institute of Purchasing and Supply revealed.

The CIPS/Markit services PMI came in at 57.7 in June, indicating strong growth though the index marked a three-month low. This was less than the score of 58.3 expected by economists and the three-month low of 58.6 in May.

The greenback rose to 1.0679 against the Canadian dollar upon the data, setting a 3-day high, from an early low of 1.0644. The greenback is likely to challenge resistance at the 1.08 region.

The US currency strengthened to an 8-day high of 0.8720 against the NZ dollar and a new 2-week high of 0.9328 against the aussie, reversing from early lows of 0.8777 and 0.9442, respectively. Extension of uptrend may take the greenback to resistance levels of around 0.865 against the kiwi and 0.925 against the aussie.

Looking ahead, the US ISM non-manufacturing composite index for June is due shortly.

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Source: Alliance News

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