Dollar Surged Last Week Amidst Middle East Uncertainty, Strong US Payrolls

(RTTNews) - The U.S. Dollar rebounded against major currencies during the week ended June 5 amidst the persisting uncertainty surrounding the Middle East peace process as well as the strong jobs data from the U.S. that boosted bets of a Fed rate hike.

During the past week, the U.S. dollar inter alia rallied against the euro, the British pound, the Australian dollar, the Japanese yen, the Swedish krona, the Canadian dollar and the Swiss franc. The 6-currency Dollar Index jumped more than a percent over the course of the week. Here is a quick recap of the dollar's trajectory during the week ended June 5.

During the week, which witnessed a volatile geopolitical situation in the Middle East as well as key economic data releases from the U.S., the dollar recorded strong gains. The Dollar Index, a measure of the Dollar's strength against a basket of 6 currencies climbed from the low of 98.92 recorded on Monday to the high of 100.11 recorded on Friday.

Data released during the week revealed a higher-than-expected increase in both the ISM Manufacturing PMI and Services PMI in the month of May. The JOLTs report showed job openings in April stood at 7.62 million, much higher than 6.88 million that the markets had anticipated. The monthly additions to non-farm payrolls according to the U.S. Bureau of Labor Statistics during May stood at 172 thousand, much higher than 85 thousand that the markets had expected. The unemployment rate remained steady at 4.3 percent on expected lines.

Amidst the developments, the Dollar Index, which had closed at 98.91 on May 29 finished trading at 100.07 a week later. The index added 1.17 percent during the week ended June 5.

As the strong jobs data from the U.S. triggered Fed rate hike worries and boosted the greenback, the EUR/USD pair plunged 1.19 percent in a week. During the week ended June 5, the EUR/USD pair dropped to 1.1521, from 1.1660 a week earlier. The pair ranged between a weekly high of $1.1666 recorded on Monday and a weekly low of $1.1517, on Friday. The common currency's moves came despite expectations of another rate hike by the ECB on June 11. Data released during the week showed flash inflation readings for May recording 3.2 percent, the highest in over two and a half years and matching consensus estimates.

The week ended June 5 also witnessed the pound plunging 0.89 percent against the dollar. The sterling, which had closed at $1.3461 on May 29 declined to $1.3341 by June 5 amidst domestic political developments. The GBP/USD pair traded between a high of 1.3485 and a low of 1.3329, both recorded on Friday.

Impacted by the Dollar's resurgence, the risk-sensitive Aussie also plummeted against the U.S. Dollar during the week ended June 5. The slippage for the AUD/USD pair during the week was around 1.9 percent, from 0.7184 on May 29 to 0.7047 on June 5. The pair traded between the week's high of 0.7192 recorded on Monday and the week's low of 0.7037 recorded on Friday. Data released during the week had showed first quarter GDP rising 0.3 percent but missing market expectations of 0.5 percent.

The Japanese yen also plunged 0.66 percent against the U.S. dollar during the week ended June 5. The USD/JPY pair which had closed at 159.27 on May 29, jumped to 160.32 in a week's time. During the week, the pair ranged between the week's low of 159.25 touched on Monday and 160.35 recorded on Friday amidst renewed verbal intervention from Japanese authorities.

Sentiment in the currency market improved amidst reports of Iran announcing an end to attacks on Israel. Anxiety ahead of the release of the U.S. inflation readings for May on Wednesday also lingers. The six-currency Dollar Index touched a high of 100.21 earlier in the trade, versus the previous week's high of 100.11. It has since eased to 99.89 versus the close of 100.07 on Friday.

With the dollar cooling after a surge in the previous week, the euro and the pound have rebounded. The EUR/USD pair has rallied to 1.1543 from 1.1521 at close on Friday even as markets expect the European Central Bank to raise rates by a quarter percentage point on Thursday.

The GBP/USD pair has also strengthened to 1.3352 from 1.3341 at the end of the previous week. The AUD/USD pair which was at 0.7047 at close on Friday strengthened to 0.7057. The USD/JPY pair declined, dropping to 160.03 from 160.32 at close on Friday.