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June Employment Report Sends US dollar to Higher Ground

H.S. Borji
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June Employment Report Sends US dollar to Higher Ground

The US dollar advanced against a basket of currencies Thursday, as US employers added more than 200,000 workers for the fifth consecutive month and the unemployment rate fell to a nearly six-year low.

The US dollar index, a broad performance measure of the greenback’s strength against six commonly traded peers, advanced 0.31 percent to 80.20. The dollar index is now on pace for a weekly gain of 0.1 percent ahead of the July 4 long weekend.

In US data, nonfarm payrolls made headlines Thursday. US employers added 288,000 jobs last month, after adding 224,000 payrolls in May, the Labor Department reported today in Washington. June marked the fifth consecutive month US employers added more than 200,000 jobs, the first time such a feat has been reached since 1999-2000.

US employers have added an average of 272,000 per month over the last three months.

The unemployment rate fell 0.2 percentage point to 6.1 percent, a nearly six-year low.

Average earnings increased 0.2 percent in June, official data showed. Compared to June 2013, average earnings were up 2 percent.

Labour force participation was unchanged at 62.8 percent.

Weekly jobless claims – a narrower measure of unemployment – increased 2,000 to 315,000 in the week ended June 28.

Industry data confirmed Thursday the US service economy remained elevated in June. Markit Group’s gauge of US service activity was revised from 61.1 to 61.0, as new business growth and job creation rose at the fastest rates since the survey first began in October 2009.

The Institute for Supply Management’s gauge of national service activity eased slightly in June from 56.3 to 56.0, but remained elevated after 14 of 18 non-manufacturing sectors reported growth.

The USDJPY advanced 0.41 percent to 102.20. The pair faces initial support at 101.50 and resistance at 102.41.

In Japanese data, Markit Group confirmed today Japan’s services sector contracted in June, despite an increase in new business growth. Japan’s services PMI declined from 49.3 to 49.0.

The EURUSD fell sharply Thursday as the European Central Bank opted to make no changes to monetary policy at this month’s meetings. The EURGBP fell 0.41 percent to 1.3602. The pair is testing the 1.3599 support level. On the upside, initial resistance is likely found at 1.3681.

The GBPUSD declined 0.09 percent to 1.7148. The pair is testing the 1.7144 support. Resistance is likely found at 1.7183.

In economic data, the UK service economy remained elevated in June, as ongoing new business growth led to another sharp rise in employment. Markit Group’s gauge of UK service activity eased from 58.6 to 57.7 in June.

The USDCAD edged lower as Canada’s trade balance improved in May. The pair declined 0.38 percent to 1.0624. The pair faces initial support at 1.0604 and resistance at 1.0684.

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