Dollar strengthened against the euro on Friday after government report showed the U.S. economy shed just 20 000 jobs in April fewer than economists had expected.
Dollar strengthened against the euro on Friday after government report showed the U.S. economy shed just 20 000 jobs in April fewer than economists had expected. Continued profit booking by the traders in the European currency amid optimism that the Federal Reserve's cycle of cutting interest rates might be done and expectation of recovery in economy in light of series of rate cut.
According to the Labor Department U.S. economy shed just 20 000 jobs last month from an upwardly revised 80 000 in March. Markets were expecting job losses of 80 000 according to a Reuters poll. The national unspanployment rate slipped to 5.0 percent from 5.1 percent in March compared with forecasts of a rise to 5.2 percent. The data changed the view of immediate another rate cut and are supported the greenback.
The Fed on Wednesday cut its overnight lending rate by 25 basis points to 2 percent and signaled that its next move would depend on developments in financial markets and the economy. The Feds signal boosted the optimism of the traders in the currency market. Since mid Septspanber the U.S. central bank has slashed the fed funds rate target by 3.25 percentage points to shore up an economy.
Slightly spaner than expected U.S. manufacturing and consumer spending data released last week also supported the span recovery in the green back. A report showing a slightly higher than forecast reading of the Fed's preferred inflation gauge also helped the sentiments of the investors.
But in the last month in a separate release the US Commerce Department revealed the nation's trade deficit expanded unexpectedly by 5.7% to $62.3 billion in February.
As expected the European Central Bank had left the interest rates unchanged while the Bank of England cut its benchmark interest rate by 25 basis points to 5 percent.Medium Term OutlookExpecting a short term recovery in dollar if it sustains below 1.5725 Supports are 1.5909 1.6148 and 1.6420. Resistances are 1.555 1.5380 1.5220 and 1.5110. In spot dollar closed at 1.5423 (1.5469) against the euro after trading in the range 1.5501 1.5357.Last day DEUR June traded in the range 154.67 153.35 and closed at 153.79.
Spot Dollar vs Euro
TECHNICAL OUTLOOK (Intra day)
DEUR (June) Bullish above 154.12 bearish below 153.67
DATA TO WATCH
2008 May 5
ISM Non Manufacturing Composite
Fed Holds TAF Auction
Fed Chairman Bernanke Speaks
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