Greenback up on US jobs data

New York

THE US dollar was modestly higher last Friday after data showed the US labour market unexpectedly improved in May, but the currency ended the week lower, for a third consecutive week, as uncertainty about the US economy capped gains.

The Labor Department's employment report showed that the jobless rate fell to 13.3 per cent last month from 14.7 per cent in April, which was a post-World War II high. It came on the heel of surveys showing consumer confidence, manufacturing and services industries stabilising.

Economic conditions have significantly improved as businesses have begun to reopen after shuttering in mid-March to slow the spread of Covid-19.

The US dollar index was up 0.18 per cent to 96.93 late last Friday. It was down 1.4 per cent from the previous Friday's close. On the day, the US dollar was 0.38 per cent stronger against the euro, at US$1.129. Against the safe-haven Japanese yen, the US dollar was up 0.44 per cent to 109.61 yen.

"Today, you've seen better-than-expected economic data coming out of the US in terms of the jobs numbers," said Chuck Tomes, portfolio manager at Manulife Asset Management.

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"The reaction on the back of that has been expectations of better growth coming out of the US, as well as a steepening yield curve, both of which have provided a lift to the dollar," he added.

The uncertainties about the economic outlook and the possibilities of a second wave of infections had capped the greenback's gains, he also said.

Some analysts said the May job gains in might not soon be repeated. "While this was no doubt a great jobs report, a lot of good news was already priced in," said Matt Miskin, co-chief investment strategist at John Hancock Investment Management. "Future estimates and expectations on the economic rebound are likely higher from here, and therefore harder to meet or beat."

The US dollar's strengthening was less visible against the euro, and in the US dollar index, which heavily weights the euro, after the single currency rose following the European Central Bank's announcement last Thursday that it was expanding its stimulus programme.

The euro jumped 1.73 per cent last week, its third straight weekly rise, though it was lower on the day. REUTERS