The U.S. dollar was little changed on Friday and for the week, amid choppy trade that saw the currency recover from a short-lived downdraft following weaker-than-expected jobs report.
The closely watched jobs report showed that the U.S. economy added 156,000 jobs last month, while the unemployment report ticked up to 4.4% from 4.3% in July, disappointing Wall Street expectations for between 170,000 and 180,000 new jobs. The report came amid a mixed batch of U.S. data, including manufacturing and consumer surveys.
The ICE U.S. Dollar Index DXY, +0.30% which measures the currency against a half-dozen rivals, was trading at 92.811 late Friday in New York, up slightly from 92.650 late Thursday.
An earlier slump in the buck occurred immediately after the August jobs report, which included cuts to prior monthly job tallies and underscored muted levels of inflation, running below the Federal Reserve’s 2% target on an annual basis.
However, some market participants read the data as unlikely to dissuade the U.S. central bank from lifting rates further this year and beginning to commence the unwind of its $4.5 trillion balance sheet. Both actions are seen as bullish for greenback.
“The headline number was weaker than the consensus, but not weak enough to change the Fed’s stance on rates. Also, August is notorious for statisticians to get it right and numbers are usually revised higher afterward. Investors take it with a grain of salt,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.
In other economic data, the closely watched Institute for Supply Management manufacturing index jumped to a six-year high in August.
The Commerce Department said construction spending fell 0.6% in July but was up 1.8% year-over-year. Economists surveyed by MarketWatch had forecast a 0.6% monthly rise, and the University of Michigan said its final gauge of consumer sentiment for August came in at 96.8 versus a preliminary reading of 97.6.
The ICE dollar gauge finished the week less than 0.1% higher, but is down 9.2% year to date.
In European pairs, the dollar reversed losses against the euro with the shared currency losing ground after a news report said the European Central Bank may not have a plan to reduce monetary stimulus until December.
Bloomberg, citing unnamed officials, reported that ECB policy makers may not be ready to complete their decision on tapering bond purchases until shortly before the current program expires in December. Comments during a late-June speech in Sintra, Portugal from ECB President Mario Draghi, where he hinted at winding down monetary stimulus in the eurozone, had been part of the catalyst for the resurgent euro over the past few months.
The euro EURUSD, -0.3946% weakened against most major rivals on Friday after the news report. Against the dollar it changed hands at $1.1864, compared with $1.1909 late Thursday. The shared currency weakened against the buck by 0.5% over the week.
Some analysts speculated whether the ECB would try to talk the rallying currency lower at the conclusion of its policy meeting next Thursday. The shared currency has gained nearly 13% against the dollar so far this year.
“There are two views among investors: one is that the euro may be growing overvalued at this stage and two, that the ECB is growing worried that its normalization process will add to its strength,” said Esiner.
Meanwhile, the British pound GBPUSD, +0.1624% strengthened against the buck, changing hands at $1.2955, compared with $1.2931 late Thursday, even as U.K. manufacturing data for August unexpectedly hit a four-month high.
In Asia, the ollar edged up against the Japanese yen USDJPY, +0.26% rising to ¥110.28 from ¥109.98 late Thursday. Over the week, the dollar gained 0.8% against the yen.
In other currency pairs, the Canadian dollar USDCAD, -0.6890% continued to rise against the buck, adding to a sharp gains on Thursday. The stronger-than-expected data on gross domestic product on Thursday sent the loonie sharply higher against the dollar. On Friday, the loonie strengthened further, with the greenback buying C$ 1.2386, compared with C$1.2486 late Thursday. Over the week, the loonie appreciated by 0.8%.