Forex - Dollar gains on fiscal uncertainty, looks past jobs data

Shutterstock photo - The dollar rose against most of its peers on Friday despite better-than-expected data out of the labor market and service sector, as investors remained anchored in the safe-harbor currency to see if Congress lifts the U.S. debt ceiling and if the Federal Reserve continues stimulating the economy.

In U.S. trading on Friday, EUR/USD was up 0.16% at 1.3070, largely due to preliminary data revealing that eurozone inflation came in stronger than expected last month, suggesting more consumer demand than once thought.

The currency zone's consumer price index remained unchanged at an annualized rate of 2.2% in December, outpacing market calls for the index to tick down to 2.1% in December.

In the U.S., solid employment and service-sector data failed to spark a full risk-on trading session that would normally weaken the greenback.

In the U.S. earlier, the Bureau of Labor Statistics reported the U.S. economy added 155,000 nonfarm payrolls in December, beating market calls for the economy to create 150,000 new jobs.

In addition, the U.S. employment rate remained unchanged at 7.8% last month, though markets had hoped for a decline to 7.7%.

Meanwhile, the Bureau of Labor Statistics revised October's figures to 137,000 from 138,000 new jobs and hiked November's figure to 161,000 from 146,000.

Elsewhere, the U.S. Institute of Supply Management reported earlier that its non-manufacturing index improved to 56.1 in December from 54.7 in November, beating expectations for a rise to 54.2.

Still, fears that Congress may stage a repeat performance of 2011's debt-ceiling debates, which nearly threw the country into default thanks to brinkmanship, kept investors sticking with the dollar, especially on sentiment the jobs market is not improving fast enough to suggest the economy may be returning to its pre-recession health.

Uncertainty as to when the Federal Reserve may wind down its monetary stimulus programs also pushed down the pair.

The Fed revealed in the minutes of its December monetary policy meeting that some members are ready to consider winding down the U.S. central bank's monthly USD85 billion bond-buying program, which weakens the greenback as a side effect.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.29% at 1.6062.

In the U.K., service-sector activity fell unexpectedly last month.

In a report, The Chartered Institute of Purchasing & Supply and the NTC Economics said that U.K. Services PMI fell to a seasonally adjusted annual rate of 48.9 in December from 50.2 in the preceding month.

Analysts had expected U.K. Services PMI to rise to 50.4 last month.

The dollar was up against the yen, with USD/JPY up 1.09% at 88.19 and down against the Swiss franc, with USD/CHF trading down 0.24% at 0.9246.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.07% at 0.9871, AUD/USD up 0.07% at 1.0474 and NZD/USD trading up 0.37% at 0.8312.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.06% at 80.61. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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