KSE100 34350.42  ▲ Increased By 231.03 (0.68%)
KSE30 15000.89  ▲ Increased By 85.48 (0.57%)
BR100 3516.22  ▲ Increased By 11.22 (0.32%)
BR30 18244.64  ▲ Increased By 13.27 (0.07%)

Business Recorder Logo

Jun 07, 2020 PRINT EDITION
Top News

Dollar ends July on sour note on weak US labor cost data

NEW YORK: The dollar fell against a basket of currencies on Friday, ending a decent month on a sour note as a record-low

July 31, 2015

imageNEW YORK: The dollar fell against a basket of currencies on Friday, ending a decent month on a sour note as a record-low rise in US employment costs in the second quarter dialled back bets the Federal Reserve would raise interest rates later this year.

The euro rebounded strongly against the greenback following Thursday's losses in the wake of encouraging inflation data in the euro zone.

A near 1 percent drop in Brent crude oil prices hurt the Norwegian crown, Australian dollar and other commodity-linked currencies, but they turned higher as the greenback stumbled on the disappointing 0.2 percent gain in labor costs in the second quarter.

Some analysts had reckoned a rise of at least 0.5 percent in the employment cost index would seal the deal for the Fed to hike rates, perhaps as early as September.

Fed policy-makers have been concerned about the absence of wage pressure even as the jobless rate hit its lowest in over seven years in June.

The latest ECI reading also tempered the optimism from Thursday's report on second-quarter US growth. "It knocked the knees out of the dollar longs. It took everyone by shock," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

A stronger-than-forecast report on US Midwest factory activity removed some of the sting from the ECI report.

The dollar index was at 96.599, down 0.98 percent for its biggest one-day decline in nearly eight weeks.

It was on track for a 1.2 percent gain in July.

The euro rose 1.3 percent against the dollar at $1.1075, reducing its monthly loss to 0.5 percent.

The dollar fell 0.3 percent to 123.71 yen after touching a near seven-week high on Thursday. It was on track to rise 1 percent versus the yen in July.

The next big moment for the greenback will be the July US jobs report. "The trend of dollar strength will probably continue heading into the US jobs data next week," Shinji Kureda, head of FX trading group at Sumitomo Mitsui Banking Corp. in Tokyo. Meanwhile, currencies closely linked to oil and commodities prices fell earlier Friday on fears about global oversupply and diminishing demand from China before they recovered from the dollar's downturn.

The dollar fell 0.7 percent against the Norwegian crown at 8.1058 crowns, reducing its monthly gain to 3.3 percent. The Aussie dollar gained 0.7 percent versus the greenback at $0.7341, putting it on track for a 4.7 percent loss in July.

Copyright Reuters, 2015