The dollar edged lower Friday as traders focus on U.S. jobs data later in the day that will help the Federal Reserve decide on when to lift interest rates. She said in response to a question that she expected the Fed to gradually raise its key rate, “and probably in the coming months, such a move would be appropriate”. The broad Standard & Poor’s 500 stock index fell 0.3% and the Nasdaq composite dropped 0.6%. The Dow Jones Industrial Average closed down 0.2 percent at 17,807.06.
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Automotive shares were also hit: GM lost 2.2 percent and Ford 1.3 percent as both face pressure after the slowdown in USA auto sales last month. But it rose to as high as 111.455 in the previous session, its loftiest peak in a month, and was on track to notch a gain of 4 percent in May.
USA government bond prices rose.
The financial sector has been waiting seven years for the Federal Reserve to increase the short-term interest rates substantially, which allows banks to follow with higher rates for borrowing.
The US added only 38,000 net new positions in May, a quarter of the amount expected, clearly catching the Fed off guard after top officials had repeatedly said a June or July rate increase was in the cards.
The yield on benchmark US 10-year Treasury notes edged up 1 basis point at 1.844 percent after rising as much as 5.5 basis points from Friday.
“Non-farms remain crucial but the Fed look confident that the labour market and current growth is strong enough to withstand a rate hike, nonetheless we will likely see a swing in the United States dollar if figures miss significantly”, Ana Thaker, Market Economist at PhillipCapital UK, said in a note.
About 6.5 billion shares changed hands on USA exchanges, below the roughly 7 billion daily average for the past 20 trading days, according to Thomson Reuters data.
Asian shares were mixed Friday as investors awaited a U.S.jobs report later in the day and action from the U.S. Federal Reserve later in the month. The euro rallied more than 1 percent to $1.2190, and the dollar slid 1 percent to 107.60 yen. Newmont Mining jumped $2.88, or 8.9 percent, to $35.23, while Freeport-McMoRan added 46 cents, or 4.3 percent, to $11.12. The stock added 76 cents to $19.09. US shares were set for slight gains, with Dow and S&P 500 futures inching up 0.1 percent.
ENERGY: Benchmark U.S. crude oil was down 14 cents to $49.03 a barrel in electronic trading on the New York Mercantile Exchange. And while she welcomed the rebound in stocks and financial markets following turbulence early in the year, she said risks of further stress from China’s economic slowdown could reignite the turmoil.
Deflationary forces from the oil price plunge to $50 from $115 in the second half of 2014 kick-started central banks into action at the beginning of past year.
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The yen hit a two-week high of 108.525 per dollar on Thursday, a move some market players attributed to disappointment over a lack of a clear plan on stimulus from Japanese Prime Minister Shinzo Abe. Britain’s FTSE 100 slipped 0.1%.
