The dollar has been inching north since the start of the European trading session on Friday. Earlier in the day, the USD index bounced off session lows to get back to the 102.00 handle after fresh data out of the United States showed that the economy created 390,000 jobs in May, exceeding the forecast of 325,000.
The previous month’s result was revised up to 436,000 from 428,000. However, other details of the report painted a mixed picture as the unemployment rate remained steady at 3.6% versus an expected drop to 3.5%, while average hourly earnings growth came in at 5.2%, below last month's 5.6% gain.
The release seemed to boost demand for the greenback in a knee-jerk market reaction as the USD index exceeded the 102.00 mark while Wall Street stocks moved lower after the report, with Dow Jones futures shedding nearly 200 points ahead of the opening bell.
The elevated headline figure suggests the Federal Reserve will likely continue to stick to its aggressive tightening plan, which is positive for the USD. On the other hand, mixed details of the report suggest the economic growth may be slowing already.
EUR/USD And Gold Under Pressure
EUR/USD slipped back to the 1.0700 zone as a result of a gradual rejection from local highs seen around 1.0765 earlier in the day. However, the downside potential seems to be limited at this stage, especially as the common currency continues to hold well above the 20-DMA, currently at 1.0605. On the upside, the key immediate barrier still arrives at 1.0786, where May’s high lies.
Anyway, the risk-on tone continued to diminish in response to the data out of the US. European indexes were holding just above the flat line, threatening diving back into negative territory. Gold prices were also pressured by a stronger dollar, slipping back towards the $1,850 region.
However, as the downward momentum looks measured at this stage, the pressure could be limited and short-lived, while the buck may still attract some profit-taking ahead of the weekend.