Dollar extends gains on strong job market report
Sunday, 3 June 2007
NEW YORK, June 2 (AFP): The dollar traded mainly higher yesterday as better-than-expected US data helped shift expectations on healthy growth going forward in the world's biggest economy.
The euro slipped to 1.3442 dollars at 2100 GMT from 1.3454 dollars in New York late on Thursday, after earlier in the day slipping below the 1.34-dollar mark for the first time for almost two months.
The dollar rose to 122.09 yen-hitting its highest level since late January-from 121.71 yen on Thursday.
In late New York trade, the dollar stood at 1.2209 Swiss francs from 1.2250 Thursday.
The pound was being traded at 1.9819 dollars after 1.9800.
The US currency picked up momentum after data showed the US economy added a net 157,000 jobs in May, better than expected. Analysts said the report suggests the economy is coming out of its first-quarter soft patch but that inflation remains only moderate.
The Federal Reserve has been on hold for nearly a year with base US rates at 5.25 per cent. In recent months, market participants have shifted away from a perception that the Fed will need to cut rates to stimulate flagging growth.
Meanwhile, the closely watched US ISM survey on manufacturing activity came in above forecasts, rising to 55.0 in May from 54.7 in April to reach its highest level for 12 months.
Analysts said the good news on the US economy was enough to offset evidence of moderating inflation, with the annual core PCE indicator-the Federal Reserve's preferred measure of inflation -- dropping to a 13- month low of 2.0 per cent, according to a Commerce Department report.
The report also showed US consumer income down 0.1 per cent in April, while spending rose 0.5 per cent.
While the data as a whole shored up the dollar, there was some skepticism about the perceived improvement in the figures.
Next week's market focus is Thursday's meeting of the European Central Bank in which the bank is seen as almost certain to raise its key interest rates to a five-and-a-half-year high to curb inflation in the 13-nation eurozone economy.
The euro slipped to 1.3442 dollars at 2100 GMT from 1.3454 dollars in New York late on Thursday, after earlier in the day slipping below the 1.34-dollar mark for the first time for almost two months.
The dollar rose to 122.09 yen-hitting its highest level since late January-from 121.71 yen on Thursday.
In late New York trade, the dollar stood at 1.2209 Swiss francs from 1.2250 Thursday.
The pound was being traded at 1.9819 dollars after 1.9800.
The US currency picked up momentum after data showed the US economy added a net 157,000 jobs in May, better than expected. Analysts said the report suggests the economy is coming out of its first-quarter soft patch but that inflation remains only moderate.
The Federal Reserve has been on hold for nearly a year with base US rates at 5.25 per cent. In recent months, market participants have shifted away from a perception that the Fed will need to cut rates to stimulate flagging growth.
Meanwhile, the closely watched US ISM survey on manufacturing activity came in above forecasts, rising to 55.0 in May from 54.7 in April to reach its highest level for 12 months.
Analysts said the good news on the US economy was enough to offset evidence of moderating inflation, with the annual core PCE indicator-the Federal Reserve's preferred measure of inflation -- dropping to a 13- month low of 2.0 per cent, according to a Commerce Department report.
The report also showed US consumer income down 0.1 per cent in April, while spending rose 0.5 per cent.
While the data as a whole shored up the dollar, there was some skepticism about the perceived improvement in the figures.
Next week's market focus is Thursday's meeting of the European Central Bank in which the bank is seen as almost certain to raise its key interest rates to a five-and-a-half-year high to curb inflation in the 13-nation eurozone economy.