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US Dollar Rebounds as Hiring Remains Elevated in May

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US Dollar Rebounds as Hiring Remains Elevated in May

The US dollar advanced against a basket of currencies Friday after the Labor Department showed the US economy recouped all jobs lost during the recession.

The US dollar index, a weighted average of the greenback’s performance against six major peers, advanced 0.12 percent to 80.47. Risk aversion weakened the index on Thursday as investors looked ahead to the nonfarm payrolls report.

US employers maintained a solid pace of hiring in May, as employment returned to its pre-recession level. Nonfarm payroll increased 217,000 in May, following a revised gain of 282,000 the prior month, the Labor Department reported today.

The unemployment rate held steady at 6.3 percent., a more than five-year low. Economists expected unemployment to rise to 6.4 percent last month.

Wages accelerated 0.2 percent last month, after registering no growth in April, the Labor Department showed. Year-on-year, average earnings advanced 2.1 percent, following an annual gain of 1.9 percent.

Today’s data suggest the economy has rebounded from a weak first quarter that saw gross domestic product contract 1 percent annually. Employment growth in the last two months, combined with a pickup in factory output and sales, suggests the economy will grow more than 3 percent annually in the second quarter.

The USDCAD edged higher, advancing 0.08 percent to 1.0933. The pair faces initial support at 1.0904 and resistance at 1.0953.

Employment levels in Canada increased 25,800 last month, topping estimates, Statistics Canada reported today. The unemployment rate rose from 6.9 percent to 7 percent as more people began searching for work.

The EURUSD declined 0.18 percent to 1.3639 after hitting an intraday low of 1.3621. The daily chart shows initial support at 1.3552 and resistance at 1.3720.

In economic data, German industrial production advanced 0.2 percent in April, half the rate of forecasts. However, the country’s trade surplus surged from €15 billion to € 17.7 billion, topping estimates.

The euro was on the ropes Thursday after the European Central Bank cut its benchmark interest rate to 0.15 percent and set the deposit rate at -0.10 percent. The added stimulus measures are expected to weaken the euro, as the ECB attempts to keep deflation at bay.

The GBPUSD fell back below the 1.68 handle amid weaker than forecast trade data. The GBPUSD tumbled 0.12 percent to 1.6795. Initial support is likely found at 1.6753 and resistance at 1.6857.

The UK trade deficit widened in April from -£8.283 billion to -£8.924 billion, as chemical and manufacturing exports waned. Economists had forecast a trade deficit of £8.65 billion pounds.

The USDJPY advanced for the fourth time in five days, gaining 0.1 percent to 102.53. Initial support is likely found at 102.24 and resistance at 102.68.

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