RTTNews - The dollar was mostly stable versus other majors Thursday, ceding ground only to the yen following the release of dismal employment numbers, which fueled fears that the economic outlook remains bleak.
Reflecting continued weakness in the labor market, the Labor Department released a report on Thursday showing that employment fell by much more than expected in the month of June, pushing the unemployment rate up to a new twenty-five year high.
The report showed that non-farm payroll employment fell by 467,000 jobs in June following a revised decrease of 322,000 jobs in May. Economists had expected a decrease of about 365,000 jobs compared to the loss of 345,000 jobs originally reported for the previous month.
Still, with risk averse traders in search of a safe haven, the dollar inched higher versus the higher-yielding euro, rising a penny to 1.4000 for the first time in a week.
As expected, the European Central Bank or ECB on Thursday left its key interest rate unchanged at a record low for the second straight month as the 16-nation economy faces its worst recession since the Second World War.
In its Governing Council meeting held in Luxembourg, the ECB kept its key interest rate, which is the rate on main refinancing operations at 1%, where it has been from May.
Looking ahead into next year, after a phase of stabilization, a gradual recovery with positive quarterly growth rates is expected by mid-2010, said ECB head Jean-Claude Trichet.
Downplaying the specter of deflation, Trichet said that indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council's aim of keeping inflation rates below, but close to, 2% over the medium term.
Versus the sterling, the dollar remained near 1.6400, having set a weekly high of 1.6322 earlier in the day. On a longer term basis, the dollar is barely changed over the past month against the sterling.
The UK CIPS/Markit Purchasing Managers' Index or PMI for the construction sector dropped to a seasonally adjusted 44.5 in June from 45.9 in May. This was the sixteenth month of contraction in the construction sector. Economists had expected the reading to rise to 46.
Meanwhile, the dollar extended its run of choppy trading versus the yen, slipping to 95.78 from an overnight level just below 97. The price of oil slipped below $67, giving the dollar a boost to C$1.1600 against the petro-linked loonie.
For comments and feedback: contact email@example.com