Investing.com - The dollar dropped to three-week lows against a basket of its major peers on Friday after a far weaker-than-expected U.S. jobs report for May quashed expectations for a near-term rate hike from the Federal Reserve.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 1.74% at 93.9 late Friday, the weakest level since May 12. The index ended the week down 1.54%.
The Labor Department reported earlier Friday that the U.S. economy added just 38,000 jobs last month, the smallest increase since September 2010.
Economists had forecast that payrolls would increase by 164,000.
April’s number was revised down to 123,000 from an earlier estimate of 160,000.
The unemployment rate fell to 4.7% from 5% in April as more people dropped out of the labor force.
The weak data cast doubts over the prospects for a rate hike by the Fed in the coming months and sparked renewed concerns over slowing global growth.
The dollar had risen strongly against the other major currencies in May after Fed Chair Janet Yellen and other central bank officials indicated that the economy was on a strong enough footing to support higher interest rates.
Higher rates are positive for the dollar because they make the U.S. currency more attractive to yield-seeking investors.
The dollar fell more than 2% against the yen, with USD/JPY down 2.15% at 106.53 late Friday. The pair posted a weekly loss of 3.84%.
The euro jumped higher, with EUR/USD advancing 1.91% to 1.1366, the largest one-day gain since December 3.
The pound also gained ground, with GBP/USD rising 0.73% to 1.4528, but gains were held in check amid uncertainty over the June 23 referendum on Britain’s European Union membership.
In the week ahead, investors will be looking to a speech by Fed Chair Janet Yellen on Monday for signs on the future direction of interest rates.
Market watchers will also be keeping a close eye on developments in the U.K. ahead of the upcoming EU referendum.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, June 6
Germany is to publish data on factory orders.
Fed Chair Janet Yellen is to speak at an event in Philadelphia.
Tuesday, June 7
The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
The Swiss National Bank is to publish data on foreign currency reserves.
Wednesday, June 8
Japan is to release data on the current account as well as revised data on first quarter growth.
China is to produce data on the trade balance.
The U.K. is to release data on manufacturing and industrial production.
Canada is to report on building permits.
Thursday, June 9
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish a policy statement which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.
Markets in China are to be closed for a holiday.
China is to publish inflation data.
ECB President Mario Draghi is to speak at an event in Brussels.
The U.K. is to release data on the trade balance.
The U.S. is to publish the weekly report on jobless claims.
Friday, June 10
Markets in China are to be closed for a holiday.
Canada is to publish the monthly employment report.
The U.S. is to round up the week with data on consumer sentiment.