Dollar Muted After Non-farm Payrolls Data
After exhibiting weakness due to spread of the coronavirus in the U.S. during the European session on Friday, the dollar was unmoved by the U.S. non-farm payrolls for February.
Data from the Labor Department showed that the U.S. employment rose much more than expected in the month of February.
The Labor Department said employment surged up by 273,000 jobs in February, matching the upwardly revised spike in January.
Economists had expected employment to increase by about 175,000 jobs compared to the jump of 225,000 jobs originally reported for the previous month.
With the much stronger than expected job growth, the unemployment rate unexpectedly edged down to 3.5 percent in February from 3.6 percent in January. The rate had been expected to remain unchanged.
Data from the Commerce Department showed that the U.S. trade deficit narrowed more than expected in the month of January, as the value of imports fell by more than the value of exports.
The Commerce Department said the trade deficit narrowed to $45.3 billion in January from a revised $48.6 billion in December.
The dollar has been under pressure in the last couple of sessions on expectation of further interest rate cut from the Federal Reserve at the March meeting.
New York Fed President John Williams said on Thursday that the coronavirus outbreak posed risks to the U.S. economy and the central bank is prepared to act as needed.
In a separate event, Minneapolis Federal Reserve President Neel Kashkari said that the Fed could cut rates further if the impact of the coronavirus is worse than expected.
Investors now expect the Fed to reduce the benchmark rate by at least another quarter point at its meeting on March 17-18.
The greenback fell alongside stocks in the previous session, as the spread of a new Coronavirus heightened worries over a prolonged world economic slowdown.
The greenback dropped to more than a 2-week low of 1.3026 against the pound and held steady thereafter. The pound-greenback pair had finished yesterday’s trading session at 1.2947.
Data from the Lloyds Bank subsidiary Halifax and IHS Markit showed that UK house prices increased at a slower pace in February.
House prices increased 0.3 percent month-on-month in February, slightly slower than the 0.4 percent rise seen in January but faster than the expected increase of 0.2 percent.
The greenback depreciated to more than an 8-month low of 1.1341 against the euro and moved sideways thereafter. The pair had closed Thursday’s deals at 1.1237.
Data from Destatis showed that Germany’s factory orders grew more than expected in January driven by higher demand in aircraft and mechanical engineering.
Factory orders expanded 5.5 percent on a monthly basis, reversing a 2.1 percent decrease in December. Orders were forecast to grow moderately by 1.2 percent.
The greenback that declined to more than a 6-month low of 104.99 against the yen at 5:15 am ET held steady in subsequent deals. The pair was worth 106.16 when it ended deals on Thursday.
Preliminary data from the Cabinet Office showed that Japan’s leading index fell in January after rising in the previous month.
The leading index, which measures the future economic activity, fell to 90.3 in January from 91.0 in December. Economists had expected a score of 91.3. A similar reading was seen in November 2009.
The greenback slipped to a 2-year low of 0.9338 against the franc at 8:15 am ET and has stabilized afterwards. At Thursday’s close, the pair was valued at 0.9449.
Looking ahead, Canada Ivey PMI for February, U.S. consumer credit and wholesale sales for January will be out in the New York session.