The dollar finished a strong week in characteristic robust fashion, rising to a fresh 16-month peak versus the reeling euro. Traders were influenced by European debt fears and the latest in a series of encouraging reports about the U.S. jobs market.
U.S. non-farm payrolls were up 200,000 in December, unexpectedly driving the unemployment rate down to 8.5 percent, according to figures just released by the Labor Department.
The increase was foreshadowed by yesterday’s strong private payrolls report from ADP, which said that private sector employment jumped by 325,000 jobs in December following a downwardly revised increase of 204,000 jobs in November.
The data hints that the Federal Reserve will likely hold off on further quantitative easing for the time being.
The buck touched $1.27 against the euro for the first time since September 2010, having picked up more than three cents this week.
Disappointing German factory orders figured cemented expectations that the European economy is in the midst of a serious slowdown.
Factory orders declined more than expected in November, data from the Federal Ministry of Economy and Technology revealed. Industrial orders dropped 4.8 percent month-on-month, reversing last month’s 5 percent growth. The decline far exceeded the 1.8 percent fall forecast by economists.
Early gains took the dollar to $1.5425 versus the sterling, and the buck was steady near Y77 versus the yen.
Looking at other economic news, retail sales in Eurozone declined more than expected by economists in November, data from Eurostat showed. Sales fell 0.8 percent month-on-month compared to economists’ expectations for a 0.4 percent drop. This followed a 0.1 percent increase in sales in October.
Meanwhile, the unemployment rate in the euro area remained unchanged in November in line with economists’ expectations. The number of unemployed totaled 16.372 million in November, up 45,000 from October.
Elsewhere, a survey carried out by the European Commission showed that the downward trend in Eurozone economic confidence continued in December.