Dollar gains on upbeat U.S. jobs report

Investing.com - Investing.com - The dollar traded largely higher against most major currencies on Thursday after official data revealed a more robust uptick in U.S. hiring in June than markets were expecting.

In U.S. trading on Thursday, EUR/USD was down 0.37% at 1.3608.

The dollar firmed after the U.S. Department of Labor reported that non-farm payrolls rose by 288,000 in June, easily surpassing expectations for an increase of 212,000. May's figure was revised up to a gain of 224,000 from 217,000.

The unemployment rate ticked down to 6.1% from 6.3% in May. Analysts had expected the jobless rate to hold steady at 6.3% last month.

A day earlier payroll processor ADP reported in its nonfarm payrolls report that the U.S private sector added 281,000 jobs last month, beating expectations for an increase of 200,000.

The numbers firmed the dollar by keeping expectations on track for the Federal Reserve to continue tapering stimulus programs this year and raise interest rates the next.

Fed stimulus programs such as monthly bond purchases aim to spur recovery by suppressing long-term interest rates, weakening the dollar as a side effect.

Also on Thursday, the Institute of Supply Management said its non-manufacturing purchasing managers' index fell to 56.0 in June from 56.3 in May. Analysts had expected the index to hold steady at 56.3 in June.

Meanwhile in Europe, ECB President Mario Draghi reiterated the bank's forward guidance that rates will remain on hold at present or lower levels for an extended period.

He emphasized that "the governing council is also unanimous in its commitment to use unconventional instruments, if necessary, to address the risk of too-prolonged period of low inflation.'

The ECB left all rates on hold earlier Thursday, in a widely anticipated decision, after cutting rates to record lows in June.

Draghi said unemployment rate in the euro zone is still too high and warned that risks to the economy remain to the downside.

The ECB president also announced that it will shift to a six-week meeting cycle from January 2015 and that it will start publishing meeting minutes.

The dollar was up against the yen, with USD/JPY up 0.43% at 102.21, and up against the Swiss franc, with USD/CHF up 0.53% at 0.8936.

The greenback was up against the pound, with GBP/USD down 0.10% at 1.7150.

Markit Economics reported that its U.K. services PMI slowed to 57.7 in June from 58.6 in May, and below forecasts of 58.3. It was the lowest reading in three months, but remained well above the 50 level separating growth from contraction.

New business volumes rose at their fastest rate in six months, while the sector created jobs at a record pace.

The report added to indications that the economy was continuing to grow strongly in the second quarter after the economy expanded at the fastest annual rate since 2007 in the first three months of 2014.

Sterling has strengthened broadly since the start of this year, gaining more the 13% against the dollar amid expectations that the deepening U.K. recovery will prompt the Bank of England to raise rates before the end of the year.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.28% at 1.0634, AUD/USD down 1.01% at 0.9349 and NZD/USD down 0.26% at 0.8750.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.36% at 80.26.

On Friday, markets in the U.S. are to remain closed for the Independence Day holiday.

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