RTTNews - The dollar enjoyed its best performance in months on Friday, paring a portion of its steep recent losses after a mixed bag of jobs data fueled speculation the worst of the recession may be over for the world's biggest economy.
With the jobs data signaling the US is in recovery, the dollar skyrocketed versus the yen and extended its modest gains from the previous session versus the euro and sterling.
While Friday's all-important jobs report was hardly a strike-up-the-band moment, it did provide another piece of evidence that, if nothing else, the recession is running its course.
Employment fell by much less than expected in the month of May, according to a report released by the Labor Department on Friday, although the unemployment rate rose more than expected to reach a new twenty-five year high.
The report showed that non-farm payroll employment fell by 345,000 jobs in May following a revised decrease of 504,000 jobs in April. Economists had expected a decrease of about 520,000 jobs compared to the loss of 539,000 jobs originally reported for the previous month.
At the same time, the Labor Department said that the unemployment rate jumped to 9.4 percent in May from 8.9 percent in April. With the increase, the unemployment rate came in above economist estimates of 9.2 percent and rose to its highest level since August of 1983.
The dollar surged to the upside versus the euro after a head fake lower following the jobs report. The dollar soared to 1.3950, a big improvement from a 5-month low of 1.4338, set earlier in the week.
At the same time, the dollar continued to spring back to life against the sterling, rising to 1.5970 from a 6-month low of 1.6662, set on Tuesday.
Signaling easing inflationary pressures in the British economy, output prices declined in May from the previous year for the first time since July 2002. Friday, the Office for National Statistics reported a 0.3% year-on-year fall in output prices for all manufactured goods in May, reversing a 1.3% rise in April.
After being stuck in the mud for the past few weeks against the yen, the dollar surged to 98.70, its highest level since May 11.
Meanwhile, the dollar firmed to C$1.1118 versus the loonie. Following gains in April, Canadian employment decreased by 42,000 in May, led by further manufacturing losses in Ontario, according to data released Friday by Statistics Canada.
The unemployment rate rose by 0.4 percentage points to 8.4%, the highest rate in 11 years. Since the employment peak of last October, employment has fallen by 363,000 or 2.1%.
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