The dollar weakened against its peers on Friday, closing out the week near 5-month lows, as the market figured the Federal Reserve will not be pushed to increase interest rates as a result of the US nonfarm payrolls report which was better than forecast. The US economy gained 215,000 jobs in March, beating forecasts for an increase of 205,000. US unemployment inched up to a rate of 5% in March from its lowest level in 8 years of 4.9% registered in February. Average hourly earnings rose by 7 cents in March following a decline of 2 cents in February. US manufacturing activity grew in March for the first time in 6 months as ISM’s manufacturing index posted an increase to a reading of 51.8 from 49.5 in February. The US dollar index closed at 94.58 off its 5-month-plus low of 94.31 reached on Thursday. The index posted losses of 1.65% on the week, ending its 1st quarter down 4.16%, marking its worst quarterly performance in 6 years.
The euro strengthened against the dollar with the pair up 0.07%, trading at 1.1389 towards Friday’s close off its session low of 1.1334, after having come off its session high of 1.1437 reached earlier in the day. The euro reached 5-month-plus highs against the dollar, registering gains for 5 sessions in a row as investors overlooked the strong US nonfarm payroll report after Federal Reserve Chair Janet Yellen recently stated that the central bank will be vigilant in its approach to raising rates. Data released out of the eurozone revealed that the region’s manufacturing PMI climbed to a reading of 51.6 in March from 51.4 in February, beating forecasts for the index to remain flat. Germany’s manufacturing PMI inched up from a reading of 50.4 in February to 50.7 in March while France’s manufacturing PMI stayed at 49.6.
The pound weakened against the dollar with the pair down 0.97%, trading at 1.4224 off its session low of 1.4170 after having come off its session high of 1.4372 reached earlier in the day. The pound was pressured to the downside following the release of data by Markit which revealed that its UK manufacturing PMI increased from a reading of 50.8 in February to 51.0 in March, compounding forecasts for a rise to 51.2. The pound was also weaker against the euro with the pair up 1.05%, trading at 0.8008 towards Friday’s close off its session high of 0.8019 after having come off its session low of 0.7917 reached earlier in the day.
The yen strengthened against the dollar to 1.5-week highs with the pair down 0.76%, trading at 111.70 towards Friday’s close off its session low of 111.59, after having come off its session high of 112.60 reached earlier in the day. The yen was supported to the upside overlooking a poor Japanese business survey indicator. The Tankan All Big Industry CAPEX survey registered at negative 0.9%, compounding forecasts for a decline of 0.7% and marking a 3-year low. Analysts predict results to deteriorate for the upcoming quarter, raising uncertainty over policy moves the Bank of Japan will implement in response. The pair closed out the week retreating 1.55%.
The Australian dollar strengthened while the New Zealand and Canadian dollars weakened against the greenback. The Aussie dollar gained 0.30% against the greenback with the pair trading at 0.7681 towards Friday’s close off its session low of 0.7598, after having come off its session high of 0.7700 reached earlier in the day. The Aussie dollar had trimmed advances earlier in the session while remaining supported on the back of data which revealed that the Caixin manufacturing PMI was up from 48.0 in February to 49.7 in March. The kiwi dollar was down 0.16% against the greenback, with the pair trading at 0.6899 towards Friday’s close off its session low of 0.6835 after having come off its session high of 0.6936 reached earlier in the day. The pair was still within reach of its 9-month high of 0.6966 hit on Thursday. The loonie slipped 0.05% against the dollar, with the pair trading at 1.3011 towards Friday’s close off its session high of 1.3146 after having come off its session low of 1.2967 reached earlier in the day. The loonie weakened as the greenback was supported by solid US employment data and falling oil prices, which put downside pressure on the commodity associated Canadian currency. US crude oil closed down 4.33%, trading at $36.68 per barrel as worry over the global supply surplus lingered.
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