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US Dollar Mixed As Economy Adds 164k Jobs, Faces Renewed Trade Tensions

August 2, 2019 at 13:50 by Andrew Moran

One dollar note with an American eagleThe US dollar is mixed at the end of the trading week as a new lower-than-expected July jobs report highlighted how robust the national economy is as a diverse array of industries enjoyed gains and more people entered the workforce. But the greenback contended with renewed trade tensions between the US and China, which sent leading stock indexes into negative territory in the early part of the trading session.

According to the Bureau of Labor Statistics (BLS), the US economy created 164,000 new jobs in July, which is a little below the market forecast of 171,000. The unemployment rate was unchanged at 3.7% and hovered around a 50-year low, a positive sign because it suggests more people are entering the labor market.

Labor gains were revised downward for a combined 41,000 for May and June.

Meanwhile, a handful of sectors led the way: professional and business services (31,000), healthcare (30,000), government (20,000), and manufacturing (16,000), though hiring has slowed. The retail, media, and information sectors saw employment levels decline for the sixth consecutive month.

Hourly earnings appeared to have stalled as average wages rose just eight cents to $27.98 per hour last month. However, the increase in pay in the last 12 months ticked up 0.1% to 3.2%, but it is still under the post-2008 recession peak of 3.4% and below historical averages of 4%.

In other government numbers on Friday, the Bureau of Economic Analysis (BEA) reported that the trade deficit fell to $55.2 billion in June, higher than the median estimate of $54.6 billion. Exports slipped 2.1% to $206.3 billion, driven by fewer automobile, computer accessories, and drug shipments. Imports also dropped 1.7% to $265.5 billion, led by declines in crude oil, drugs, and mobile phone imports.

Hours after President Donald Trump announced new 10% tariffs on the remaining $300 billion in Chinese goods as of September 1, the world’s second-largest economy responded that it would retaliate with “necessary countermeasures.”

The Ministry of Commerce accused the administration violating an agreement with President Xi Jinping in June to restart trade talks and end the dispute. It confirmed in a statement:

China will have to take the necessary countermeasures to resolutely defend its core interests.

All the consequences will be borne by the United States.

The US Dollar Index was relatively flat, dipping 0.07% to 98.30. Despite the volatility in global financial markets and geopolitics, the buck is poised for a weekly gain of 0.3%, lifting its year-to-date increase to 2.2%.

The USD/CAD currency pair rose 0.24% to 1.3245, from an opening of 1.3212, at 13:22 GMT on Friday. The EUR/USD was flat at 1.1086.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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