The dollar is currently trading with mixed results against its major competitors at the end of the trading week. The U.S. currency is rising against the Japanese Yen, but is weakening against the Euro after the November jobs report showed better than expected employment growth and a drop in the unemployment rate.
In another upbeat sign for the U.S. labor market, the Labor Department released a report on Friday showing that stronger than expected job growth in the month of November pushed the unemployment rate down to a five-year low.
The report showed that non-farm payroll employment rose by 203,000 jobs in November following a revised increase of 200,000 jobs in October. Economists had been expecting employment to increase by about 180,000 jobs compared to the addition of 204,000 jobs originally reported for the previous month.
With the stronger than expected job growth, the unemployment rate pulled back to 7.0 percent in November from 7.3 percent in October. The unemployment rate had been expected to dip to 7.2 percent.
While the Commerce Department released a report on Friday showing an unexpected drop in U.S. personal income in the month of October, the report also showed continued growth in personal spending.
The report said personal income edged down by 0.1 percent in October after rising by 0.5 percent in each of the two previous months. The drop surprised economists, who had expected income to increase by 0.3 percent.
Meanwhile, the Commerce Department said personal spending rose by 0.3 percent in October following a 0.2 percent increase in September. The increase in spending matched economist estimates.
Consumer sentiment in the U.S. has improved by much more than anticipated in the month of December, according to a report released by Thomson Reuters and the University of Michigan on Friday.
The report said the preliminary reading on the consumer sentiment index for December jumped to 82.5 from the final November reading of 75.1. Economists had been expecting the index to edge up to 75.5.
The Federal Reserve should “gracefully exit” the central bank’s quantitative easing bond purchases in light of this month’s positive U.S. jobs report, Philadelphia Fed President Charles Plosser told CNBC on Friday.
Plosser, who has been a vocal skeptic about the Fed’s $85 billion per month asset buying plan, warned that QE3 has outlived its usefulness and could spark runaway inflation.
“It would be wise if we began to get rid of this program,” Plosser said. “I don’t think it’s doing very much good for us. It has a lot of unintended consequences and risk for the economy down the road.”
The Bundesbank on Friday lifted its growth projections for Germany and said the economy has picked up momentum largely supported by private consumption. Releasing its new semi-annual projections, the central bank said it now expects the gross domestic product to grow 0.5 percent this year, up from the 0.3 percent growth predicted in June.
Growth is seen at 1.7 percent in 2014, better than the 1.5 percent expansion projected earlier. The economy is forecast to grow 2 percent in 2015.
The dollar initially spiked to a high of $1.3619 against the Euro after the release of the jobs report, but has since dropped to over a 1-month low of $1.3690.
Germany’s factory orders fell more than expected in October driven by broad-based declines in domestic and foreign orders, official data showed Friday. Factory orders were down 2.2 percent from September, bigger than the expected fall of 1 percent and reversed the 3.1 percent increase seen in September.
The French trade deficit narrowed to EUR 4.69 billion in October due to a decline in imports, customs office reported Friday. Economists were expecting the shortfall to narrow to EUR 5.5 billion from September’s revised EUR 5.64 billion deficit.
The Bank of England is set to maintain its policy interest rate at the current level all through 2014 despite the more optimistic view of the growth outlook and expectations that the unemployment rate will get down to the target early in 2015, and possibly even late next year, IHS Global Insight Chief UK and European Economist Howard Archer said.
According to the economist, the central bank will likely start raising interest rates only from the third quarter of 2015. However, the bank is expected to refrain from engaging in any further Quantitative Easing over the coming months, barring a major relapse by the economy.
The greenback fell to a low of $1.6392 against the pound sterling on Friday, but has since bounced back to around $1.6350.
Britons’ inflation expectations increased in November and the proportion of respondents expecting an interest rate hike in the next 12 months increased from August, a closely watched survey showed Friday. The median inflation expectations for the coming year rose to 3.6 percent from 3.2 percent in August, the Bank of England/GfK NOP Inflation Attitudes survey said.
The buck has rebounded from yesterday’s low of Y101.614 against the Japanese Yen, to around Y102.700 on Friday.
Japan’s leading indicator, a measure of aggregate economic activity, increased more than expected in October, preliminary data released by the Cabinet Office showed Friday. The composite leading index of business conditions rose to 109.9 in October from 109.2 in September. Economists had forecast the index to rise to 109.7.