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EUR/USD rises sharply, amid historically low U.S. wage growth for 2Q

Published 07/31/2015, 05:25 PM
Updated 07/31/2015, 05:30 PM
While the euro moved higher against the dollar on Fri, it closed down for the month by 1.35%
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Investing.com -- EUR/USD rose considerably on Friday, amid staggering data which indicated that U.S. wage growth for the second quarter increased by the lowest level in more than 30 years.

The currency pair traded in a broad range between 1.0921 and 1.1113 during Friday's session, before settling at 1.0985, up 0.0051 or 0.47%. For July, EUR/USD fell by 1.35% after wavering between 1.08 and 1.12 in a see-saw month of trading as the Greek bailout and the dramatic fall of the Chinese equities markets provided significant downward pressure.

EUR/USD likely gained support at 1.0810, the low from July 21 and was met with resistance at 1.1198, the high from July 13.

The U.S. Department of Labor said on Friday morning that its Employment Cost Index rose 0.2% for the second quarter, the lowest in the 33-year history of the report. On a year-over-year basis the index plunged 0.6% to 2.0%, posting one of its lowest readings ever. Within the report, wages and salaries fell considerably by 0.5% from the first quarter to 0.2%. The metric, which is closely watched by the Fed, will likely appease dovish arguments for a delayed interest rate hike.

The poor data pushed yields on U.S. 10-Year Treasuries down more than eight basis points to 2.184, their lowest level in more than three weeks. For the week, yields on the 10-year experienced their worst five-day period since April, as plunging commodity values continued to weigh.

On Wednesday, the Federal Open Market Committee (FOMC) concluded its two-day July meeting without offering any indications on whether it will adjust its benchmark Federal Funds Rate later this fall. U.S. short-term interest rates have remained level between zero and 0.25% for nearly six years since the end of the Financial Crisis. Nearly a decade has passed since the Federal Reserve last instituted a rate hike.

In Athens, an initial round of negotiations between Greece and its international creditors from the European Central Bank, European Commission and International Monetary Fund on a new bailout were characterized as generally positive. One day earlier, IMF officials declared that they would not participate in a three-year,€86 billion Greek bailout unless the program included significant debt relief and economic reforms.

After remaining closed for a period of several weeks, the Athens Stock Exchange is set to reopen on Monday.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, lost nearly 0.40% on Friday's session to close at 97.32. Despite the slight losses, the index closed the month up more than 1.7%.

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