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US dollar edges higher on job gains

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US dollar edges higher on job gains

The US dollar increased slightly against a basket of its major competitors after job creation outpaced expectations in November, an official Labor Department report showed.

American employers added 203,000 private payrolls in November, exceeding estimates by 23,000. The unemployment rate unexpectedly fell to 7 percent, as temporarily laid off workers returned to work following the partial government shutdown. November was the second consecutive month job growth topped the 200,000 mark, a sign the labour market is improving in the fourth quarter. Average hourly earnings increased 0.2 percent in November and at an annual rate of 2 percent, in-line with forecasts.

The US dollar index rose 0.1 percent to 80.32, driven by large gains against the Japanese yen. The USDJPY pair advanced more than 1.1 percent to 102.85, taking down three resistances in the process. Supports are ascending from 100.73, 100.98 and 101.24.

The greenback had a mixed performance against the commodity peers. In North America, strong Canadian jobs data limited the greenback’s gains to just 9 pips. The pair consolidated at 1.0658 after a brief re-test of 1.07. Down-under, the Australian dollar began a long consolidation effort after falling to a three-month low earlier in the week. The AUDUSD gained 30 pips to re-test 91.00. The pair has fallen more than 12 percent since the beginning of the year.

In Europe, the common currency rallied to a one-month high despite negative factory data from Germany. German factory orders declined 2.2 percent in October and were up just 1.9 percent year-on-year. The euro received a boost Thursday after European Central Bank President Mario Draghi announced no changes to monetary policy. The ECB increased its growth forecast for the euro area to 1.1 percent in 2014.

Friday’s nonfarm payrolls report will likely support the greenback in more ways than one. In addition to being a gauge of US recovery, strong employment growth will fan expectations for the Federal Reserve to begin paring asset purchases in early 2014.

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