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Dollar Recoups Early Losses After Nonfarm Payrolls Data

Dollar Recoups Early Losses After Nonfarm Payrolls Data
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The U.S. dollar reclaimed some lost ground against its key counterparts in the European session on Friday, as better-than-expected employment data soothed some of the worries about the labor market hurt by the coronavirus pandemic.

Data from the Labor Department showed that non-farm employment plummeted by 20.5 million jobs in April after tumbling by a revised 870,000 jobs in March.

The steep drop in employment was not as bad as feared, however, as economists had expected employment to plunge by 22.0 million jobs compared to the loss of 701,000 jobs originally reported for the previous month.

The unemployment rate climbed to 14.7 percent in April from 4.4 percent in March. Economists had expected the unemployment to spike to 14.0 percent.

The dollar fell against its most major counterparts in the Asian session as trade war fears receded after US and Chinese trade officials had held a phone call and pledged to co-operate to implement the Phase 1 trade deal. After a sharp rise in weekly initial jobless claims, investors have started to price in the chance of the Fed cutting official interest rates below zero in early 2021.

The greenback bounced off to 1.2358 against the pound, from a low of 1.2408 set at 10:30 pm ET. The greenback is poised to find resistance around the 1.21 level.

The greenback was up against the yen, at a 3-day high of 106.72. The pair was worth 106.24 when it ended deals on Thursday. The greenback is seen finding resistance around the 108.00 mark.

Survey from Jibun Bank showed that Japan services sector continued to contract in April, and at a much more severe rate, with a record-low services PMI score of 21.5.

That’s down sharply from 33.8 in March and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

After falling to a 3-day low of 0.9702 at 8:15 am ET, the greenback recovered to 0.9728 against the franc. Next key resistance for the greenback is likely seen around the 0.99 level.

The greenback rose back to 1.0825 against the euro, reversing from a low of 1.0855 seen at 10:30 pm ET. Should the greenback strengthens further, it is likely to test resistance around the 1.06 region.

Data from Destatis showed that German exports declined the most on record in March as foreign demand was dampened by coronavirus, or Covid-19, pandemic.

Exports fell by seasonally adjusted 11.8 percent month-on-month, in contrast to February’s 1.2 percent rise.

The greenback reversed from its early 8-day lows of 0.6142 against the kiwi and 0.6548 against the aussie and was trading at 0.6113 and 0.6505, respectively. The greenback is likely to face resistance around 0.585 against the kiwi and 0.60 against the aussie.

The greenback staged a modest recovery against the loonie, with the pair trading at 1.3964. This followed an 8-day low of 1.3925 logged in the Asian session. Further uptrend may take the greenback to a resistance around the 1.42 area.

The material has been provided by InstaForex Company – www.instaforex.com