Dollar Little Changed After Jobs Report

The dollar is turning in a mixed performance against its major rivals Friday afternoon. The buck is up slightly against its major European rivals, but is down against the Japanese Yen. The widely followed U.S. jobs report showed weaker than expected employment growth this morning, but an upward revision to employment growth for the previous two months.

Partly reflecting a drop in government employment and the closing of Toys “R” Us stores, the Labor Department released a report on Friday showing much weaker than expected U.S. job growth in the month of July.

The report said non-farm payroll employment climbed by 157,000 jobs in July compared to economist estimates for a jump of about 190,000 jobs.

However, the report also showed upward revisions to the increases in employment in May and June, which surged up by 268,000 jobs and 248,000 jobs, respectively.

Despite the smaller than expected increase in employment, the unemployment rate dipped to 3.9 percent in July after rising to 4.0 percent in June. The modest drop matched expectations.

Reflecting a decrease in exports and an increase in imports, the Commerce Department released a report on Friday showing the U.S. trade deficit widened in the month of June.

The report said the trade deficit widened to $46.3 billion in June from a revised $43.2 billion in May. The deficit had been expected to widen to $46.5 billion from the $43.1 billion originally reported for the previous month.

Growth in U.S. service sector activity slowed by much more than anticipated in the month of July, according to a report released by the Institute for Supply Management on Friday.

The ISM said its non-manufacturing index dropped to 55.7 in July after rising to 59.1 in June. A reading above 50 still indicates service sector growth, although economists had expected a much more modest drop to 58.6.

The dollar dropped to a low of $1.1610 against the Euro Friday, but has since bounced back to around $1.1575.

Euro area private sector growth eased in July, ceding most of the momentum gained in the prior survey month, data from IHS Markit showed Friday. The composite output index fell to 54.3 in July, in line with flash estimate, from 54.9 in June.

Eurozone retail sales increased for the second straight month in June, data from Eurostat showed Friday. Retail sales grew at a steady pace of 0.3 percent on month in June driven by food sales. Sales were expected to climb 0.4 percent.

The buck fell to a low of $1.3043 against the pound sterling Friday, but has since rebounded to around $1.30.

British service sector grew at the weakest pace in three months as greater risk aversion in response to Brexit uncertainty held back new business growth in July, survey data from IHS Markit showed Friday.

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ Index dropped more-than-expected to 53.5 in July from 55.1 in June. The reading was forecast to fall to 54.7.

Members of the Bank of Japan’s monetary policy board said that the country’s economy continues to expand at a moderate pace, minutes from the bank’s June 14 and 15 meeting revealed on Friday.

The members added that the expansion is expected to continue, the minutes showed, although they pointed out that downside risks include erratic U.S. policy and the UK’s withdrawal from the European Union.

“There had been a situation where investors’ risk-taking stance had become cautious, as seen, for instance, in temporary declines in stock prices through end-May in many countries, mainly against the background of heightened uncertainties over political developments in southern Europe and of concern regarding the U.S. trade policy,” the minutes said.

The greenback reached an early high of Y111.853 against the Japanese Yen Friday, but has since retreated to around Y111.235.

The services sector in Japan continued to expand in July, albeit at a slower pace, the latest survey from Nikkei showed on Friday with a PMI score of 51.3. That’s down from 51.4, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

by RTTNews Staff Writer

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