Fundamentals

Concerns over the US economy are likely to prevent strong dollar buying support in the short term with a period of nervous consolidation realistic

The monthly US payroll report was close to expectations with a decline of 62,000, the six consecutive decline, while the May data was revised to show a 62,000 drop for the month. The unemployment rate held at 5.5% following the sharp increase seen the previous month. The latest jobless claims data also recorded an increase to 404,000 in the latest week.

The US non-manufacturing ISM index was weaker with a decline to 48.2 in June from 51.7 the previous month as higher prices undermined confidence. The dollar initially weakened to 1.5770, but then rallied back to 1.57 on a spate of short covering ahead of the Independence Day holiday.

Unease over the US economy will tend to limit the scope for dollar gains with doubts as to whether the Fed will be able to increase interest rates. The US currency was holding around 1.5715 in early Europe on Friday with cautious activity given the US holiday.