The U.S. dollar firmed against its most major trading partners in the European session on Friday, as the economy added jobs unexpectedly in May, reflecting relaxation of restrictions and partial resumption of businesses after the COVID-19-induced shut down.
Data from the Labor Department showed that non-farm payroll employment jumped by 2.51 million jobs in May after plummeting by a revised 20.69 million jobs in April.
Economists had expected a drop of 8.0 million jobs following the nosedive of 20.5 million jobs originally reported for the previous month.
The Labor Department said the improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain the spread of the disease.
With the unexpected rebound in employment, the Labor Department said the unemployment rate dropped to 13.3 percent in May from 14.7 percent in April. Economists had expected the unemployment rate to surge up to 19.8 percent.
Optimism prevailed as investors welcomed new stimulus efforts in Europe to contain the economic fallout from the coronavirus pandemic.
The European Central Bank announced Thursday it will increase its Pandemic Emergency Purchase program by a further 600 billion euros to support funding conditions in the real economy, especially for businesses and households. Markets were expecting an increase of 500 billion euros.
The currency showed mixed trading in the Asian session. While it fell against the euro and the pound, it rose against the franc and the yen.
The greenback appreciated to 109.70 against the yen, its highest level since March 27, and logged a 0.6 percent rise from a low of 109.03 set at 5:30 pm ET. The pair was worth 109.11 when it ended deals on Thursday. Immediate resistance for the greenback is likely seen around the 112.5 level.
Data from the Cabinet Office showed that the Japan leading index declined to the lowest in eleven years.
The leading index, which measures the future economic activity, fell to 76.2 in April from 85.1 in March. Economists had expected a score of 84.5.
The USD/CHF pair approached a 2-day high of 0.9644, after falling to 0.9542 at 2:15 am ET, which was its lowest level in more than two months. At Thursday's close, the pair was valued at 0.9554. The greenback is likely to face resistance around the 1.00 region, if it gains again.
The greenback was up 0.9 percent at 1.1282 against the euro, bouncing off from a 3-month low of 1.1384 seen at 2:30 am ET. The pair had closed Thursday's deals at 1.1338. The greenback is seen facing resistance around the 1.10 mark.
Preliminary figures from the statistical office Destatis showed that Germany's manufacturing orders declined at a record pace in April, extending the trend from the previous month, as the coronavirus pandemic hurt demand severely.
New orders in manufacturing fell a seasonally and calendar-adjusted 25.8 percent from March, when they declined 15 percent, which was revised from 15.6 percent. Economists had forecast a 19.7 percent slump.
On the flip side, the greenback fell to the lowest level in nearly three months against the pound, at 1.2705. The pound-greenback pair had finished yesterday's trading session at 1.2596. Should the greenback falls further, it is likely to test support around the 1.30 region.
Survey results from the Lloyds Bank subsidiary Halifax showed that UK house prices fell for a third successive month in May, though activity started picking up slightly, after the lockdown restrictions imposed to slow the spread of the coronavirus, or Covid-19, were partly eased.
The house price index decreased 0.2 percent after a 0.6 percent decline in April.
The greenback depreciated to a 3-month low of 1.3391 against the loonie, down by 0.8 percent from Thursday's closing value of 1.3498. The greenback may challenge support around the 1.31 mark.
The greenback shed 1 percent against the kiwi, falling to over a 4-month low of 0.6528. At yesterday's trading close, the pair was quoted at 0.6462. Extension of the greenback's downtrend may lead it to a support around the 0.66 region.
The greenback held steady against the aussie, after having dropped to a 5-month low of 0.7013 at 3:30 am ET. The aussie-greenback pair was worth 0.6943 at Thursday's close.