The dollar fell to its lowest level since September today after the October unemployment report in the United States. The world’s largest economy added fewer jobs than expected last month, Labor Department statistics showed. The dollar deepened its decline against a basket of currencies after a report on US services sector activity fell for a second month in a row in October.
The dollar index, which expresses the value of the dollar against a basket of six major world currencies, showed a decrease of 0.8 percent to 105.32 points shortly after 15:30 CET. The euro added 0.8 percent to the dollar at 1.0705 EUR/USD.
The US economy added about 150,000 jobs in October, which was less than expected. The unemployment rate then increased by a tenth of a percentage point to 3.9 percent. The U.S. labor market remains resilient despite economic uncertainty and high interest rates, according to analysts.
“The strongest argument for the Fed to ease its monetary policy is the fact that wage growth continues to be slow,” said economist Andrew Hunter from Capital Economics.
A report today from the Institute of Supply Management (ISM) showed that activity in the US services sector fell for the second month in a row in October. At the same time, services account for more than two-thirds of the total economic activity in the USA. The activity index in the services sector fell to a five-month low of 51.8 points from September’s 53.6 points. The fifty-point line is the dividing line between growth and decline in activity. The index also fell short of analysts’ expectations, who in a Reuters poll had predicted a drop to 53 points.
Development of the currency pair EUR/USD (1-hour chart – H1):
Development of the USDX dollar index (1-hour chart – H1):
Source: Reuters, ČTK, Capital Economics, MT4
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