The U.S. dollar rose against the euro in quiet overnight trading as investors booked some profit in the single currency's recent rebound. Persistent concerns about growth in the euro zone also weighed on the common currency. The euro also eased off recent two-week highs against the Japanese yen and 2-1/2-week peaks against the British currency.
The U.S. currency steadied off Thursday's two-month low against the British pound. Receding enthusiasm about the UK's strict plans to slash its fiscal deficit have started to give way to concerns about weaker growth prospects in Britain.
The Canadian dollar soared early Friday after local jobs data far exceeded expectations last month. The loonie strengthened to a June 28 high against the greenback on news that Canada created more than 90,000 jobs in June, which pushed the nation's unemployment rate down to a January 2009 low of 7.9%. Investors had expected the Canadian economy to add a more modest 15,000 workers in June. Market participants had also forecast the jobless rate to remain unchanged at 8.1%. The surprisingly strong payrolls data boded well for the Canadian recovery and increased expectations for a Bank of Canada interest rate hike in the not too distant future. The Canadian central bank next meets to consider monetary policy on July 20.
There is no U.S. economic data due on Friday.
: The Canadian dollar rose to its highest level in nearly a two weeks against the U.S. dollar after stronger-than-expected local jobs data increased the chance of a July 20 Bank of Canada interest rate hike. Data Friday showed that Canada created 93,200 jobs in June, well above the addition of 15,000 positions market watchers had expected. Moreover, the nation's unemployment rate unexpectedly fell to 7.9% last month, its lowest since January 2009.
Investors had expected the jobless rate to hold steady at 8.1% in June. The robust employment data helped to breathe fresh life into the Canadian economic recovery, which had shown recent signs of stalling. Canadian housing starts came in at an annualize rate of 189,300 in June, which was just below the 190,500 annual rate investors had expected. The previous month's report was revised to a rate of 295,300 annual units from 189,100.
: The euro retreated from yesterday's two-month high against the dollar as investors mostly took the approaching weekend as an opportunity to book profit in the single currency's recent rebound. Receding worries about Europe's banking sector and bouts of short-covering have lent what many investors believe to be only temporary support to the euro. Concerns about the economic growth outlook in the euro zone, now that many nations in the bloc are taking bold steps to curb deficits, are again putting downward pressure on the single currency. The single currency is likely to hold around its current ranges ahead of the July 23 announcement of stress tests for European banks.
: The British pound eased off Thursday's two-month high against the dollar as the U.K. currency generally tracked the euro lower. Sterling had garnered solid support for the better part of this week on the improvement in investor sentiment that tends to boost riskier currencies like the sterling.
The pound also softened on news that wholesale inflation eased last month. Britain's core producer price index surprisingly fell 0.3%(m/m) in June vs. expectations for a 0.1%(m/m) increase. The fall in Britain's PPI last month suggested that a recent rise in inflation might be temporary -- just as the Bank of England has forecast. Consequently, the weaker-than-expected inflation data should give the U.K. central bank more flexibility to keep interest rates low to help assist the recovery.
: The U.S. dollar neared a 1-1/2-week high against the Japanese yen, as a reduction in worries about the outlook for the global economy helped to lessen demand for safety. Shares on Wall Street have posted solid gains the past three sessions, with yesterday's fall in jobless claims to a two-month low helping to cool market chatter of a double-dip recession in the U.S.