Dollar rises broadly ahead of key U.S. payrolls data: May 6, 2016

Market Review - 05/05/2016 22:18GMT

Dollar rises broadly ahead of key U.S. payrolls data

The greenback extended gains versus the other major currencies on Thursday, despite the release of disappointing U.S. jobless claims data as investors turned their attention to Friday's key employment report.

Versus the Japanese yen, although the greenback retreated after edging higher from Australian low at 106.88 to 107.40 in European morning, renewed buying interest emerged at 106.80 in New York morning and later pushed price higher to a fresh session high of 107.50 following comments from Japan's PM Shinzo Abe.

On the data front, official data showed on Thursday that the number of people who filed for unemployment assistance in the U.S. last week jumped more than expected, though the reading still remained consistent with a firming labor market. In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 29 increased by 17,000 to a seasonally adjusted 274,000 from the previous weeks total of 257,000.

Japan Prime Minister Shinzo Abe said on Thursday that the government is prepared to take action against excessive, speculative rises in the nations currency.

The single currency moved sideways and briefly gained to 1.1495 in European morning before falling to 1.1386 in New York morning due to intra-day broad-based gain in the greenback.

The British pound retreated after edging higher to 1.4529 in European morning and then retreated to 1.1467 after release of downbeat UK service PMI. Later, price rebounded to 1.4518 but only to fall to a fresh session low of 1.1444 near European morning on broad-based gain in the usd before rebounding again to 1.4519 in New York morning.

Industry data showed on Thursday that the U.K. service sector dropped more than expected in April, showing its weakest growth in over three years and dampening optimism over the health of the British economy as the sector makes up approximately 80% of gross domestic product. In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index dropped to 52.3 last month from a reading of 53.7 in March.

In other news, Federal Reserve Bank of St. Louis President James Bullard said on Thursday, 'international headwinds appear to be waning during first half of 2016; effects of strong U.S. dollar appear to be waning; U.S. labor markets at or possibly beyond full employment; recent data and tracking estimates suggest U.S. GDP growth rate below 2 percent; core inflation trending somewhat higher; a there is a "pretty big gap" between market expectations of rate path and fed's last projections; there is uncertainty about whether Fed or market's expectations of long-run rate path is correct; market-based inflation expectations measures give a "bad signal" in foreseeing 10-year inflation far below Fed target; does not see "Brexit" vote as possible financial stress event since regardless of outcome any change will be far in the future.'

Data to be released on Friday: 

Australia AIG construction index, U.S. unemployment rate, non-farm payrolls, private payrolls, manufacturing payrolls, average earnings, participation rate, Canada unemployment rate, employment change, participation rate, Ivey PMI