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EUR/USD moves lower amid positive U.S. jobs data, Greek impasse

ForexJun 05, 2015 05:26PM ET
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The euro depreciated against the dollar on Friday, ending the week below 1.12 -- The euro fell sharply against the dollar on Friday extending losses from the previous session, as positive U.S. jobs data reinforced the notion that the Federal Reserve could institute its first interest rate hike in nearly a decade at some point this year.

EUR/USD plunged 0.0123 or 1.10% to 1.1115, capping a choppy week for the currency pair. For the week, the euro edged up 1.45% after opening on Monday below 1.10. The pair traded between a low of 1.1050 and a peak of 1.1280 on Friday.

EUR/USD likely gained support at 1.0913, the low from June 1 and was met with resistance at 1.1328 the high from May 19.

The pair moved lower in U.S. morning trading after the U.S. Bureau of Labor Statistics released better than expected job figures for the month of May. Last month, U.S. non-farm payrolls soared by 280,000, far exceeding analysts' low end of forecasts for a 220,000 gain. Private payrolls increased by 262,000 in May, as professional business services added 63,000 positions on the month. The labor market also added 17,000 construction position, following a significant gain of 35,000 a month earlier.

More importantly, average hourly wages surged by 0.3% on a month-to-month basis up from a 0.1% increase in April. The Fed would like to see robust wage growth and inflation move toward its targeted goal of 2% before it institutes its first interest rate hike in nearly a decade. While the economy grew at a tepid pace over the last several months, Hawkish members of the Fed argued that temporary drags such as severe winter weather and a West Coast port labor dispute disproportionately restrained growth. The Labor Department also upwardly revised jobs figures for the previous two months further underscoring the Hawkish viewpoints.

While the unemployment rate inched up to 5.5% in May, the Labor Force Participation rate also moved higher last month, increasing 0.1% to 62.9%.

The figures pushed yields on U.S. 10-Year Treasuries up more than 10 basis points to 2.409%, its highest level in six months. Bond prices fall when yields rise. High yields are also a sign of improving growth in the economy.

Yields on German 10-Yea bonds, meanwhile, inched down one basis point to 0.84% as the spread between U.S. and German 10-year sovereign debt increased to more than 157 basis points.

Elsewhere, the two sides in the Greek Debt negotiations failed to reached an agreement on Friday. Earlier this week, France president Francois Hollande said Greece and its international creditors appeared to be hours from reaching a deal on agreement that could unlock critical aid to the beleaguered nation. Greece prime minister Alexis Tsipras, though, may have rankled creditors on Thursday by bundling four separate obligations to the IMF into one repayment at the end of this month. In doing so, Greece delayed repayment of a €300 million payment due on Friday.

In a defiant speech to Parliament, Tsipras urged European leaders to withdraw a proposal Greece viewed as unrealistic.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained 0.93% to 96.38.

EUR/USD moves lower amid positive U.S. jobs data, Greek impasse

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