USD retreats on Friday, ends week higher

The US dollar lost ground on Friday after a reversal that followed the release of the US employment report. On a weekly basis Greenback ended as the best performer among majors as expectations of a rate hike from the Federal Reserve during 2016 rise. 

The key data today was the US employment report. NFP rose by 156.000 below expectation but still showed a solid labour market. The unemployment rate rose to 5.0% and the participation rate climbed to 62.9%. . 

“Those expecting a Fed hike in December will likely be unswayed by today's report.  We have argued the market was exaggerating the risk of a November hike.  The FOMC meeting is a week before the election and a rate move then would be unprecedented, and the meeting does not include update forecasts or a press conference. We expect market will reduce the chance of a November hike”, said analysts from Brown Brother Harriman. 

The dollar index was trading at 10-week highs above 97.00 and also on top of a relevant downtrend line before US jobs data. Then it reversed and erased gains, pulling back below the mentioned line. DXY dropped to 96.34 and then rebounded. It was about to end the week around 96.65, 1.35% above the level it had a week ago. 

Among currencies, the pound was by far the worst performer after extending losses on Friday during the Asian session with the “flash crash”.