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Strong Labor Market Expected in December Jobs Report

The U.S. Dollar rose in value on Friday morning in Europe, trading near a one-month high.

Dollar Bill

This came after data showed that the number of Americans filing new claims for unemployment benefits dropped to a three-month low last week. The ADP report revealed that private employment increased by 235,000 in December. The official jobs report, due later on Friday, is expected to show that 200,000 new jobs were added in December, and the unemployment rate remained unchanged at 3.7%. The vital labor market data is seen as prolonging the Federal Reserve's concerns about tight labor markets and suppressing inflation.

Euro Continues to Show Weakness Despite German Retail Sales Increase

The EUR/USD exchange rate fell by 0.1% to 1.0517, with the euro continuing to exhibit weakness. This occurred despite German retail sales rising by 1.1% in November compared to the previous month. The pair fell by 0.8% to reach a three-week low in the last trading session.

Sterling Falls to Six-Week Low on Belief of Weakening U.K. Economy

The GBP/USD exchange rate fell by 0.1% to 1.1898 after falling to a six-week low on Thursday. This was due to traders leaving the sterling, believing that a weakening U.K. economy would prevent the Bank of England from being as hawkish as other central banks worldwide. Analysts at ING predict that sterling will remain soft and that any more robust U.S. jobs data could lead to a move to 1.1780/1800.

Yen Retreats From Seven-Month High on Speculation of BOJ Policy Change

The USD/JPY exchange rate rose by 0.6% to 134.20, with the yen continuing to retreat from a seven-month high reached earlier in the week. This came on speculation that the Bank of Japan will reverse its ultra-loose monetary policy shortly.

Australian Dollar Edges Higher, Yuan Jumps to Four-Month High

The risk-sensitive AUD/USD exchange rate increased to 0.6752, while the USD/CNY exchange rate fell by 0.3% to 6.8616. The yuan rose to a four-month high as traders bet on a robust economic boost from China reopening its borders this month.