The U.S. dollar gave up its early gains against its key counterparts in the European session on Friday, as the nation’s employment increased less than forecast in May, denting hopes of the U.S. Federal Reserve pulling back its stimulus sooner than expected.

Data from the Labor Department showed that non-farm payroll employment jumped by 559,000 jobs in May after climbing by an upwardly revised 278,000 jobs in April.

Economists had expected employment to surge by 650,000 jobs compared to the addition of 266,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate fell to 5.8 percent in May from 6.1 percent in April, while economists had expected the unemployment rate to dip to 5.9 percent.

Federal Reserve Bank of New York President John Williams said on Thursday that the economy is ‘quite a ways off’ from maintaining the substantial further progress required so as to adjust the asset purchase program.

But Williams added that the Fed should begin to think through the various options it might have in the future.

The dollar rose in the Asian session, as strong U.S. economic data fueled worries about possible tapering of quantitative easing programme by the U.S. Federal Reserve.

The greenback declined to 1.2185 against the euro, down by 0.7 percent from a 3-week high of 1.2104 seen at 2:15 am ET. The pair had closed Thursday’s deals at 1.2127. Further drop in the currency may challenge support around the 1.24 level.

Data from Eurostat showed that Eurozone retail sales fell at a faster than expected pace in April, after rising in the previous two months, as the Covid-19 lockdown restrictions were tightened in some countries.

Retail sales decreased 3.1 percent from March. Economists had forecast a 1.2 percent drop.

The greenback weakened to a 2-day low of 109.47 against the yen, after a 2-month rise to 110.33 at 6 pm ET. The pair was worth 110.26 when it ended deals on Thursday. Should the greenback dips further, 105 is possibly seen as its next support level.

Data from the Ministry of Internal Affairs and Communications showed that Japan household spending surged 13.0 percent on year in April – coming in at 310,043 yen.

That blew away forecasts for an increase of 9.3 percent following the 6.2 percent gain in March.

Having advanced to a 3-week high of 0.9054 at 4:00 am ET, the greenback depreciated to 0.8982 against the franc. At Thursday’s close, the pair was valued at 0.9034. The greenback is seen facing support around the 0.88 level.

The greenback reached as low as 1.4200 against the pound, a 0.8 percent drop from over a 2-week high of 1.4083 set at 1:45 am ET. The pound-greenback pair had finished yesterday’s trading session at 1.4102. Immediate support for the greenback is likely located around the 1.45 level.

Survey results from IHS Markit showed that the UK construction sector expanded for the fourth straight month in May and suggested the strongest output growth for just under seven years.

The Chartered Institute of Procurement & Supply construction Purchasing Managers’ Index rose to 64.2 in May from 61.6 in April.

The greenback pulled back from an 8-day peak of 1.2133 versus the loonie, with the pair trading at 1.2072. The USD/CAD pair was trading at 1.2105 at yesterday’s close. Extension of downward trading may see the greenback finding support around the 1.16 region.

The greenback was lower at 0.7741 against the aussie, following a rise to 0.7649 at 5 pm ET. The aussie-greenback pair was worth 0.7659 at Thursday’s close. The greenback is likely to find support around the 0.81 region.

Data from the Australian Bureau of Statistics showed that Australia home loans rose a seasonally adjusted 3.7 percent on month in April – standing at A$31.0 billion.

The value of new loan commitments for owner occupier housing reached another all-time high in April, up 4.3 percent to A$23.0 billion. New loan commitments for investors rose 2.1 percent to A$8.1 billion, which was the highest level since mid-2017.

After gaining to 0.7133 at 8:15 pm ET, the greenback turned lower against the kiwi and was worth 0.7209. At yesterday’s trading close, the pair was quoted at 0.7145. Next key support for the greenback is likely seen around the 0.74 level.

The material has been provided by InstaForex Company – www.instaforex.com

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