Investing.com -- EUR/USD fell slightly on Friday by roughly 0.5% as a surprising result in the UK general election and a mixed U.S. jobs report had little impact on the currency pair.
The euro stood at 1.1202 at Friday's close, down 0.0064 or 0.57%. For the week, the pair remained in a tight range between 1.11 and 1.1373 during a less volatile stretch than a host of others throughout a choppy spring. Last week, for instance, the euro gained roughly 3% amid heightened expectations of a delayed interest rate hike by the Federal Reserve.
The U.S. Department of Labor said on Friday that nonfarm payrolls for the month of April increased by 223,000, slightly above forecasts for a 220,000 gain. The unemployment rate, meanwhile, fell by 0.1% to 5.4%, its lowest level since May, 2008 before the Financial Crisis. Nonfarm payrolls for March were also revised downward to 85,000 from an already paltry reading of 126,000.
Reaction in currency markets, however, was generally muted as the pair rose modestly to 1.1247, 30 minutes after the release on Friday morning. By comparison, the euro plunged 1.70% to 1.0844 on Mar. 6 when a strong U.S. employment report signaled the possibility of a sooner than expected rate hike. In addition, the euro surged by 2.54% back to 1.0866 on Mar. 18 after relatively dovish comments from Fed chair Janet Yellen on the state of the economy fueled speculation of a delayed lift-off.
Last week, the Fed reiterated its data-driven approach to its first potential rate hike since 2006 by removing all calendar references to the timing of lift-off. Wary of a premature rate hike, the Federal Open Market Committee said it would like to see significant improvements with wage growth and upward movements in inflation toward its target goal of 2% before it decides to raise rates. While average hourly rates inched up by 1% in April, they have risen by 2.2% on a year-over-year basis. When the U.S. Bureau of Labor Statistics' released its Employment Cost Index last week, it reported a slight uptick in wage pressures.
Meanwhile, the labor force participation rate edged up 0.1% to 62.8% in April spurred by gains in professional and business services, healthcare and construction industries. The number of workers marginally attached to the labor force remained relatively unchanged over the past year, ticking down from 2.16 million in April, 2014 to 2.115 million last month. The reading is a gauge on the number of workers who have sought employment in the last 12 months, but stopped actively looking for work over the last four weeks.
In addition, there were 6.6 million part-time workers throughout the country in April, down from 7.4 million 12 months ago. The U-6 unemployment rate, a broader reading of the nation's labor condition, measures the total amount of unemployed Americans along with marginally attached and part-time workers. During testimony before the Senate Banking Committee in February, Fed chair Janet Yellen said the picture of the nation's labor condition was "less rosy," when the U-6 unemployment rate was examined.
A disappointing jobs report on Friday may convince the Fed to take a June rate hike off the table. The Fed may opt to wait until September or even December to increase its benchmark Fed Funds Rate.
In the United Kingdom prime minister David Cameron surprisingly posted a resounding victory on Thursday night in the British general election, as his Conservative party added 28 seats to boost its majority to 331. Throughout the year, polls indicated the possibility of a hung parliament in which no party would gain majority control. Cameron promised voters a referendum on the UK's membership in the European Union if elected.
The results boosted the pound, as GBP/USD gained 1.39% to close the week at 1.5456.
Yields on U.S. 10-Year Treasuries fell roughly three basis points to 2.15, one day after moving above 2.3% to reach a two-month high. Yields on German 10-Year bunds fell four basis points to 0.54%.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained 0.17 or 0.18% to 94.91.