Dollar Spikes Up After Robust Jobs Data

Canbera-Australia (Dec 5)  The US dollar drifted higher against its major counterparts on Friday, as the economy created jobs much more than forecast in November, raising prospectus of sooner rate hike by the Federal Reserve.

According to a report released by the  Labor Department  , non-farm payroll employment surged up by 321,000 jobs in November compared to economist estimates for an increase of about 230,000 jobs.

Despite the stronger than expected job growth, the unemployment in November was unchanged from the previous month at 5.8%.

Meanwhile, the  Commerce Department  released a report showing that the US trade deficit narrowed in the month of October but still came in much wider than economists anticipation.

The report showed that the trade deficit narrowed to  USD43.4 billion  in October from  USD43.6 billion  in September. Economists had expected the deficit to narrow to  USD41.0 billion  from the  USD43.0 billion  originally reported for the previous month.

Recent data showed that US labour market is showing signs of sustained growth. Improving US economy reinforced expectations that the Federal Reserve will begin raising interest rates by the middle of next year.

The number of Americans filing new claims for unemployment benefits fell last week, pointing to an improving labor market.

 The Labor Department  report showed Thursday that initial jobless claims fell to 297,000, a decrease of 17,000 from the previous week's revised level of 314,000.

Payroll processor ADP released a report on Wednesday showing another notable increase in US private sector employment in the month of November, with an increase of 208,000 jobs.

The greenback edged up to 1.2278 against the euro, just few pips short to breach yesterday's more than 2-year high of 1.2275. If the greenback extends rise, 1.22 is likely seen as its next resistance level.

The euro area economy expanded as initially estimated in the third quarter, the second estimate from Eurostat showed.

Gross domestic product grew 0.2% sequentially in the third quarter following a 0.1% rise in the prior quarter.

The greenback, which ended yesterday's trading at 0.9712 against the franc, reached a session's high of 0.9795. Continuation of the greenback's bullish trend may lead it to a resistance around the 1.00 zone.

Extending early rally, the greenback hit near a 7-1/2-year peak of 121.37 against the Japanese yen. The pair was worth 119.77 when it ended Thursday's deals. Next key resistance for the greenback may be eyed around the 124.00 region.

Rebounding from an early low of 1.5694 against the pound, the greenback advanced to a 4-day high of 1.5617. On the upside, the greenback may test resistance around the 1.55 region.

Inflation expectations in the  UK  declined in November and the proportion of the public expecting an interest rate hike decreased from the prior quarter, the results of a quarterly survey of public attitudes to inflation, published by the Bank of  England  showed.

Inflation expectations for the coming year fell to 2.5% from 2.8% estimated in August.

The greenback rallied 0.6% to hit a 4-day high of 1.1442 against the Canadian dollar. The next key resistance for the greenback-loonie pair lies around the 1.15 mark. At yesterday's close, the pair was worth 1.1379.

The US currency appreciated to 0.8319 against the Australian dollar, a level unseen since  July 2010  . Extension of uptrend may see the greenback finding resistance around the 0.80 level.

The greenback strengthened to 0.7706 against the NZ dollar, a 4-week high, from 0.7778 hit at yesterday's  New York  session close. The greenback is poised to test resistance around the 0.76 mark.

Looking ahead, US factory orders and consumer credit data for October are due shortly.

Source: KitocNews