Dollar Appreciates After Surprise U.S. Job Growth

Trading 05 juin 2020 Commentaire »

The U.S. dollar firmed against its most major trading partners in the European session on Friday, as the economy added jobs unexpectedly in May, reflecting relaxation of restrictions and partial resumption of businesses after the COVID-19-induced shut down.

Data from the Labor Department showed that non-farm payroll employment jumped by 2.51 million jobs in May after plummeting by a revised 20.69 million jobs in April.

Economists had expected a drop of 8.0 million jobs following the nosedive of 20.5 million jobs originally reported for the previous month.

The Labor Department said the improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain the spread of the disease.

With the unexpected rebound in employment, the Labor Department said the unemployment rate dropped to 13.3 percent in May from 14.7 percent in April. Economists had expected the unemployment rate to surge up to 19.8 percent.

Optimism prevailed as investors welcomed new stimulus efforts in Europe to contain the economic fallout from the coronavirus pandemic.

The European Central Bank announced Thursday it will increase its Pandemic Emergency Purchase program by a further 600 billion euros to support funding conditions in the real economy, especially for businesses and households. Markets were expecting an increase of 500 billion euros.

The currency showed mixed trading in the Asian session. While it fell against the euro and the pound, it rose against the franc and the yen.

The greenback appreciated to 109.70 against the yen, its highest level since March 27, and logged a 0.6 percent rise from a low of 109.03 set at 5:30 pm ET. The pair was worth 109.11 when it ended deals on Thursday. Immediate resistance for the greenback is likely seen around the 112.5 level.

Data from the Cabinet Office showed that the Japan leading index declined to the lowest in eleven years.

The leading index, which measures the future economic activity, fell to 76.2 in April from 85.1 in March. Economists had expected a score of 84.5.

The USD/CHF pair approached a 2-day high of 0.9644, after falling to 0.9542 at 2:15 am ET, which was its lowest level in more than two months. At Thursday's close, the pair was valued at 0.9554. The greenback is likely to face resistance around the 1.00 region, if it gains again.

The greenback was up 0.9 percent at 1.1282 against the euro, bouncing off from a 3-month low of 1.1384 seen at 2:30 am ET. The pair had closed Thursday's deals at 1.1338. The greenback is seen facing resistance around the 1.10 mark.

Preliminary figures from the statistical office Destatis showed that Germany's manufacturing orders declined at a record pace in April, extending the trend from the previous month, as the coronavirus pandemic hurt demand severely.

New orders in manufacturing fell a seasonally and calendar-adjusted 25.8 percent from March, when they declined 15 percent, which was revised from 15.6 percent. Economists had forecast a 19.7 percent slump.

On the flip side, the greenback fell to the lowest level in nearly three months against the pound, at 1.2705. The pound-greenback pair had finished yesterday's trading session at 1.2596. Should the greenback falls further, it is likely to test support around the 1.30 region.

Survey results from the Lloyds Bank subsidiary Halifax showed that UK house prices fell for a third successive month in May, though activity started picking up slightly, after the lockdown restrictions imposed to slow the spread of the coronavirus, or Covid-19, were partly eased.

The house price index decreased 0.2 percent after a 0.6 percent decline in April.

The greenback depreciated to a 3-month low of 1.3391 against the loonie, down by 0.8 percent from Thursday's closing value of 1.3498. The greenback may challenge support around the 1.31 mark.

The greenback shed 1 percent against the kiwi, falling to over a 4-month low of 0.6528. At yesterday's trading close, the pair was quoted at 0.6462. Extension of the greenback's downtrend may lead it to a support around the 0.66 region.

The greenback held steady against the aussie, after having dropped to a 5-month low of 0.7013 at 3:30 am ET. The aussie-greenback pair was worth 0.6943 at Thursday's close.


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Ireland Economic Growth Slows To 1.2% In Q1

Trading 05 juin 2020 Commentaire »

Ireland's economic expansion slowed slightly in the first three months of the year as consumption decreased with the start of the coronavirus pandemic-triggered lockdown towards the end of the quarter, preliminary figures from the Central Statistics Office showed on Friday.

Gross domestic product grew 1.2 percent from the fourth quarter of 2019, when the economy expanded 1.7 percent. The latest GDP outcome was the worst since the second quarter of 2019, when the economy shrank 0.6 percent. The Gross National Product increased just 0.1 percent in the first three months of the year after a 1.9 percent increase in the previous quarter. Personal spending decreased by 4.7 percent in the first quarter as demand weakened due to the lockdown imposed from mid-March to slow the spread of the Covid-19 pandemic. Consumption was stagnant in the previous quarter.

The weakness in consumption was partly offset by a 0.2 percent increase in exports, while imports fell 1.5 percent. Capital Investment was significant at EUR 51.4 billion in the quarter, driven by relocations of Intellectual Property Products (IPP) to Ireland, the statistical office noted. However, the impact of IPP imported in the quarter was neutral on GDP as the increase in the capital stock was offset by the corresponding imports recorded for these products, the agency added.

On a year-on-year basis, GDP grew 4.6 percent after a 6.2 percent increase in the previous quarter.


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U.S. Government Data Shows Unbelievable Rebound In Employment In May

Trading 05 juin 2020 Commentaire »

A closely watched report released by the Labor Department on Friday claimed employment in the U.S. unexpectedly showed a substantial rebound in the month of May.

The Labor Department said non-farm payroll employment jumped by 2.51 million jobs in May after plummeting by a revised 20.69 million jobs in April.

The record spike in employment came as a shock to economists, who had expected the loss of another 8.0 million jobs following the nosedive of 20.5 million jobs originally reported for the previous month.

Employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade, according to the Labor Department.

Most other sectors also saw rebounds in employment, although government employment tumbled by another 585,000 jobs, mostly reflecting local governments laying off teachers.

The Labor Department claimed the improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain the spread of the disease.

James Knightley, Chief International Economist at ING, called the data "simply astonishing given the slow pace of reopening and the fact that more than 12 million people filed a new unemployment claim during the survey period."

With the unexpected rebound in employment, the Labor Department said the unemployment rate dropped to 13.3 percent in May from 14.7 percent in April. Economists had expected the unemployment rate to surge up to 19.8 percent.

The unexpected decrease in the unemployment rate came as the household survey found employment soared by more than 3.8 million persons compared to the 1.7 million person increase in the size of the labor force.

However, Knightley said there are "some oddities in here," as are the number of unemployed fell by only 2.1 million, suggesting "new workers appear to have been magicked up out of no-where."

"The response rate was well down on usual levels so this could be adding to the sense of confusion as well as how people self identify in the range of responses available to them in the survey," he added.

Meanwhile, the report said average hourly employee earnings fell by $0.29 or 1.0 percent to $29.75 in May after spiking by $1.35 or 4.7 percent to $30.04 in April.

The annual rate of average hourly earnings growth subsequently slumped to 6.7 percent in May from 8.0 percent in the previous month.

Michael Pearce, Senior U.S. Economist at Capital Economics, noted the drop in average hourly earnings reflects composition effects, as low wage workers were disproportionately fired then rehired.

A note from the Labor Department revealed the unemployment rate would have been about 3 percentage points higher if not for the misclassification of persons absent from work due to coronavirus-related business closures.

"In other words, the unemployment rate in April was reported at 14.8%, but was really 19.8%, and in May was reported as 13.3%, but was really 16.3%. The incompetence is breathtaking," said Chris Low, Chief Economist at FHN Financial.

"The sample size of both establishment and the household reports was smaller than usual and the household survey team misclassified millions of unemployed as 'employed, on temporary layoff' for a third consecutive month," he added. "Nevertheless, the gist of the report is convincing."


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UK House Prices Fall For Third Month Amid Covid-19

Trading 05 juin 2020 Commentaire »

UK house prices fell for a third successive month in May, though activity started picking up slightly, after the lockdown restrictions imposed to slow the spread of the coronavirus, or Covid-19, were partly eased.

The house price index decreased 0.2 percent after a 0.6 percent decline in April, monthly survey results from the Lloyds Bank subsidiary Halifax showed Friday.

Economists had forecast a 0.7 percent fall. In March, prices slid 0.3 percent. The house price inflation, which is the year-on-year change in the index, eased only slightly in May, from 2.7 percent to 2.6 percent. The average price of a house in May was GBP 237,808 versus GBP 238,314 in the previous month. In the March to May quarter, house prices dropped 0.5 percent from the previous three months ended February, when they rose 2.8 percent. The successive declines in house prices reflect a continued loss of momentum following what was a strong start to the year, Russell Galley, Halifax managing director, said. With a limited number of transactions available, calculating average house prices remains challenging and increased volatility is to be expected, he cautioned. Galley pointed out that the mid-month relaxation of restrictions in England that allowed estate agents and conveyancers to restart operations, brought much-needed positive news with some advance indicators of buyer and seller interest quickly showing signs of improvement. "This is likely to provide a short-term boost as buyers and homeowners attempt to kick-start transactions that had previously been put on hold," he said. "Looking ahead, we expect market activity to increase progressively as restrictions are eased further across the whole of the UK and we continue to have confidence in the underlying health of the housing market over the long-term." That said, the extent of downward pressure on market confidence and prices over the coming months will depend on how quickly the economy is able to recover from the effects of the pandemic and the available government policy support for jobs and households, Galley added.


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*Canadian Dollar Rise To 1.5149 Vs Euro, 0.9353 Vs Aussie

Trading 05 juin 2020 Commentaire »

Canadian Dollar Rise To 1.5149 Vs Euro, 0.9353 Vs Aussie


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*Canadian Dollar At 3-month High Of 1.3393 Versus U.S. Dollar After Jobs Data

Trading 05 juin 2020 Commentaire »

Canadian Dollar At 3-month High Of 1.3393 Versus U.S. Dollar After Jobs Data


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*U.S. Dollar Firms To 1.1286 Against Euro

Trading 05 juin 2020 Commentaire »

U.S. Dollar Firms To 1.1286 Against Euro


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Labor Department Report Shows Unexpected Rebound In U.S. Employment

Trading 05 juin 2020 Commentaire »

A closely watched report released by the Labor Department on Friday claimed employment in the U.S. unexpectedly showed a substantial rebound in the month of May.

The Labor Department said non-farm payroll employment jumped by 2.51 million jobs in May after plummeting by a revised 20.69 million jobs in April.

The rebound in employment came as a shock to economists, who had expected the loss of another 8.0 million jobs following the nosedive of 20.5 million jobs originally reported for the previous month.

With the unexpected rebound in employment, the Labor Department said the unemployment rate dropped to 13.3 percent in May from 14.7 percent in April. Economists had expected the unemployment rate to surge up to 19.8 percent.


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*U.S. Dollar Rises To 0.9619 Against Franc

Trading 05 juin 2020 Commentaire »

U.S. Dollar Rises To 0.9619 Against Franc


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*Dollar Climbs To Over 2-month High Of 109.66 Against Yen After Jobs Data

Trading 05 juin 2020 Commentaire »

Dollar Climbs To Over 2-month High Of 109.66 Against Yen After Jobs Data


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