Print

Mail

wiki links

Greenback weakens against euro despite US job data

The dollar weakened against the euro in London on Friday after a brief spike on a strong US job creation report, which went no further than cementing expectations of a US interest rate hike of a quarter point on June 30.

The single European currency in late-day deals was at US$1.2258 against US$1.2225 in New York late on Thursday.

The dollar was trading at ?111.25 after ?110.80 on Thursday.

Crucial data from the US Labor Department showed that 248,000 jobs were created last month, above predictions of 218,000 rise and taking the three-month total to 947,00 -- the best three-month gain since the summer of 2000.

While the data was strong, it was not robust enough to signal a half-point hike by the US Federal Reserve on June 30.

And, as a quarter-point hike was fully priced in, some of those expecting a bigger gain sold the dollar.

The euro slipped to a low of US$1.2142 before rising to a high of US$1.2272, then settling back slightly.

"Expectations of the coming measured hike in US interest rates have left the dollar weaker today, but is unlikely to change its range-bound behavior ahead of the Fed's decision," said Michael Woolfolk, currency strategist at Bank of New York.

The dollar's initial reaction to the report was both "violent and indecisive," he said, adding that the net reaction to the employment report was positive for US equities but negative for the dollar.

"With global financial markets keying on this report, the print was destined to have a strong impact regardless of the actual number," Woolfolk added.

"Compared with median forecasts the headline number was very strong but some had expected an even bigger number," said Paul Bednarczyk at 4CAST.

The euro's initial dip lower also brought in fresh buyers, he added.

Elsewhere, the Australian and New Zealand dollars were bolstered by constructive comments from the governor of the Reserve Bank of Australia (RBA) after their recent falls.

RBA governor Ian MacFarlane was relatively optimistic on the outlook for Australia in terms of growth and inflation.

Separately, expectations that the Bank of England will hike interest rates next week kept the pound well bid.

The central bank last raised interest rates last month, its third quarter point hike since November.

The euro was changing hands at US$1.2258 from US$1.2225 late on Thursday in New York, ?136.39 (?135.47), ?0.6674 (?0.6639) and 1.5245 Swiss francs (Sf1.5281).

The dollar stood at ?111.25 (?110.80) and Sf1.2437 (Sf1.2497).

The pound was at US$1.8372 (1.8410), ?204.38 (?203.94) and Sf2.2843 (Sf2.2990).

On the London Bullion Market, the price of an ounce of gold stood at US$388.30 from US$390.35 late on Thursday.
This story has been viewed 2082 times.