Dollar gains on U.S. May employment report, ECB move

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Investing.com - The dollar traded higher against most major currencies on Friday after a solid May jobs report kept market expectations firm that the Federal Reserve will continue to wind down its $45 billion bond-buying program, the latest in a series of stimulus programs rolled out since the 2008 financial crisis to spur U.S. recovery.

In U.S. trading on Friday, EUR/USD was down 0.12% at 1.3645.

The U.S. Labor Department reported earlier that the economy added 217,000 in May, close to market expectations for a 218,000 increase, after a 282,000 rise in April, whose figure was revised down from a previously estimated 288,000 gain.

The private sector added 216,000 jobs last month, exceeding expectations for a 210,000 gain, which drew market applause and firmed the dollar.

The report also showed that the U.S. unemployment rate remained unchanged at 6.3% last month compared to expectations for a rise to 6.4%.

The data, viewed by markets as not exceptionally robust, was still strong enough to keep expectations firm for the Federal Reserve to continue winding down its monthly bond-buying program, which weakens the dollar by suppressing long-term interest rates.

The Federal Reserve's current bond-buying program, the third since the 2008 financial crisis, has swelled the U.S. central bank's balance sheet to more than $4 trillion today from $2.9 trillion in late 2012.

The euro, meanwhile, continued to come under pressure after the European Central Bank cut its benchmark interest rate on Thursday to a record-low 0.15% from 0.25%, cut its deposit rate to -0.1% and said it will support the banking sector to spur lending via targeted long-term credit injections.

Elsewhere on Friday, official data revealed that Germany's trade surplus widened to €17.7 billion in April from €15.0 billion in March, whose figure was revised up from a previously estimated surplus of €14.8 billion. Analysts had expected the trade surplus to widen to €15.2 billion in April.

The dollar was up against the yen, with USD/JPY up 0.11% trading at 102.52 and up against the Swiss franc, with USD/CHF up 0.23% at 0.8934.

The greenback was up against the pound, with GBP/USD down 0.07% at 1.6808.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.07% at 1.0931, AUD/USD down 0.06% at 0.9334 and NZD/USD down 0.06% at 0.8495.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.09% at 80.45.

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This article appears in: Investing , Forex and Currencies

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