Dollar drops despite strong jobs report
Sunday, 8 July 2007
NEW YORK, July 7 (AFP): The dollar dropped yesterday to near-record lows against the euro as a strong US employment report failed to allay traders' concerns about the state of the world's biggest economy.
The European single currency was trading at 1.3626 dollars around 2100 GMT, up from 1.3596 dollars late Thursday and not far from its all- time record peak of 1.3682 dollars on April 27.
Against the yen, the dollar traded Friday at 123.34, up from 122.92 late Thursday, while the euro hit a peak of 168.15.
In late New York trade, the dollar stood at 1.2181 Swiss francs after 1.2173 late Thursday.
The pound was being traded at 2.0103 dollars, down from 2.0114.
The US currency got a short-lived boost against most other major currencies after a key non-farm payrolls report exceeded expectations, the latest in a recent string of healthy indicators on the US economy.
Figures from the Labor Department showed the United States added 132,000 jobs in June, slightly more than expected, while the unemployment rate was unchanged at 4.5 per cent and the two previous months' job gains figures were revised sharply upward.
Despite the strong report it was not surprising that subsequent dollar gains were only temporary, said Neil Mellor at the Bank of New York.
"The dollar is up against a barrier," he explained.
"From a technical point of view it has had the upper hand recently, but in terms of underlying interest rate expectations, which are the predominant driver in the market, the dollar's problem is that a Federal Reserve rate hike is simply not in the picture.
Meanwhile, the euro and the pound were both steady as the market digested interest rate decisions and hawkish rhetoric from central banks Thursday.
The European Central Bank left its base rate on hold at 4.0 per cent, as expected, but indicated it may raise eurozone rates in September.
The Bank of England confirmed expectations by lifting rates a quarter point to 5.75 per cent, and its accompanying statement gave no indication that the tightening cycle was over.
The European single currency was trading at 1.3626 dollars around 2100 GMT, up from 1.3596 dollars late Thursday and not far from its all- time record peak of 1.3682 dollars on April 27.
Against the yen, the dollar traded Friday at 123.34, up from 122.92 late Thursday, while the euro hit a peak of 168.15.
In late New York trade, the dollar stood at 1.2181 Swiss francs after 1.2173 late Thursday.
The pound was being traded at 2.0103 dollars, down from 2.0114.
The US currency got a short-lived boost against most other major currencies after a key non-farm payrolls report exceeded expectations, the latest in a recent string of healthy indicators on the US economy.
Figures from the Labor Department showed the United States added 132,000 jobs in June, slightly more than expected, while the unemployment rate was unchanged at 4.5 per cent and the two previous months' job gains figures were revised sharply upward.
Despite the strong report it was not surprising that subsequent dollar gains were only temporary, said Neil Mellor at the Bank of New York.
"The dollar is up against a barrier," he explained.
"From a technical point of view it has had the upper hand recently, but in terms of underlying interest rate expectations, which are the predominant driver in the market, the dollar's problem is that a Federal Reserve rate hike is simply not in the picture.
Meanwhile, the euro and the pound were both steady as the market digested interest rate decisions and hawkish rhetoric from central banks Thursday.
The European Central Bank left its base rate on hold at 4.0 per cent, as expected, but indicated it may raise eurozone rates in September.
The Bank of England confirmed expectations by lifting rates a quarter point to 5.75 per cent, and its accompanying statement gave no indication that the tightening cycle was over.