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Dollar Retreats After Recovering From Early Fall

Dollar Retreats After Recovering From Early Fall

The U.S. dollar recovered a bit Friday morning after data showed a slightly smaller than expected drop in U.S. employment in the month of April, although the fall was quite steep and the biggest in several decades.

However, the dollar’s recovery proved short-lived, as the data gave rise to expectations that the Federal Reserve might well cut interest rate to hitherto unseen level of 0 – 0.25%.

The dollar index, which rose to 99.94 by mid-morning, tumbled to 99.46 subsequently, and was last seen at 99.78, down 0.1% from previous close.

Against the Euro, the dollar was almost flat at $1.0835 after having dropped to $1.0876 earlier.

The Pound Sterling was stronger at $1.2405, recovering from around $1.2350. It had strengthened to $1.2465 at one points.

The Japanese currency was down more than 0.4% at 106.73 a dollar, easing from Thursday’s close of 106.27 a dollar.

The Aussie was stronger US$0.6531, firming up from US$0.6495.

The Swiss franc gained more than 0.2% to 0.9709 after closing at 0.9731 on Thursday.

The loonie was gaining about 0.3%, firming up to C$1.3930 from C$1.3973.

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% in April from 4.4% in March. Economists had expected the unemployment to spike to 14%.

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