The dollar has extended its gains versus its major European rivals on Friday, but has retreated in comparison to the Japanese Yen. The all important U.S. jobs report for June showed a smaller than expected increase this morning. Most investors seem to be of the opinion that the U.S. jobs report was not weak enough to prompt any action by the Federal Reserve.
Employment in the U.S. increased for the twenty-first consecutive month in June, according to a report released by the Labor Department on Friday, although the pace of job growth for the month fell well short of economist estimates. The Labor Department said non-farm payroll employment rose by 80,000 jobs in June compared to economist estimates for an increase of about 100,000 jobs.
Despite the continued job growth during the month, the unemployment rate remained unchanged at 8.2 percent, in line with economist estimates.
Thursday’s surprise interest rate cut by China, for the second time this year, and monetary policy decisions by the European Central Bank and the Bank of England failed to inspire investors. The ECB announced a reduction in interest rates to a historically low level and the BoE decided to raise the size of its asset purchase plan by GBP 50 billion to GBP 375 billion. However, investors were disappointed that the ECB made no mention of further nonstandard measures, such as LTRO’s, or further bond purchases.
The global economic outlook has become more worrisome over the past few months with deteriorating investment, employment and manufacturing in Europe, the U.S., Brazil, China and India, International Monetary Fund Managing Director Christine Lagarde said Friday. She also said the lender will downgrade the global growth forecast in its upcoming report.
Delivering the Nikkei Symposium Keynote Speech in Tokyo, Lagarde said, “In the IMF’s updated assessment of the world economy, to be released ten days from now, the global growth outlook will be somewhat less than we anticipated just three months ago.”
The greenback has been gaining ground against the Euro since the beginning of July. The move has brought the currency from a low of $1.2692 at the end of June, to a 2-year high of $1.2265 on Friday.
Germany’s industrial production rebounded in May with better-than-expected growth that was driven by strong activity in the construction sector even as the euro area struggles to recover from the deepening sovereign debt crisis.
Seasonally adjusted industrial production increased 1.6 percent from April, when it decreased a revised 2.1 percent, data from the Federal Ministry of Economy and Technology showed Friday. The rate of expansion surpassed the 0.2 percent growth economists had forecast.
The dollar has been gaining ground versus the pound sterling for the past 3 sessions, reaching $1.5460 on Friday, its highest level since June 11th.
Output price inflation in the U.K. eased to its lowest level in nearly three years in June as falling prices of crude oil and imported metals allowed manufacturers to reduce charges to cope with weak demand. The output price index for home sales rose 2.3 percent year-on-year, after the 2.9 percent increase in May, the Office for National Statistics said Friday. Economists had expected prices to rise 2.4 percent.
The buck has pulled back from Thursday’s high of Y80.085, to a 3-day low of Y79.486 on Friday.
Japan’s leading index rose unexpectedly May, preliminary data published by the Cabinet Office revealed Friday. The leading index rose to 95.9 in May from 95.6 in April. Economists had forecast a decline to 95.