The U.S. dollar was supported last week by comments of several Fed officials, who noted that the Fed could raise its interest rate in June or July. The Fed Chairwoman Janet Yellen said last Friday that an interest rate hike would be likely appropriate "in the coming months".
But the U.S. dollar dropped today on the weak U.S. labour market data. The U.S. economy added 38,000 jobs in May, missing expectations for a rise of 164,000 jobs, after a gain of 123,000 jobs in April. It was the smallest rise since September 2010.
The U.S. unemployment rate fell to 4.7% in May from 5.0% in April, the lowest level since November 2007, but the decline was driven by a fact that people dropped out of the labour force.
The Fed said that it would raise its interest rates if the labour market continues to strengthen and if inflation is picking up toward 2% target. Inflation is now supported by a rise in oil prices, but the job creation seems to lose momentum.
I think that it is unlikely the Fed would raise its interest rate in June due to the weak U.S. labour market data and ahead of the referendum on Britain's membership in the European Union (EU) on June 23 as Britain's exit from the EU would have a negative impact on the U.S. economy.
The likelihood for an interest rate hike in July declined after today's release of the weak U.S. labour market data. If the labour market data in June remains weak, the Fed will unlikely raise its interest rates.
OPEC meeting on Thursday ended without any deal. OPEC members seemed to be content with the current price level. Oil prices rose in the recent weeks due to the oil supply disruptions and falling output in the U.S.
It is likely that the currency pair EURUSD will rise toward the high of May 11 at $1.1445 or the psychological level at $1.1500, if there are negative news from the U.S. and there are no negative economic data from the Eurozone.
If the U.S. economic data is better than expected and in case of the negative economic data from the Eurozone, the currency pair EURUSD may test the psychological level at $1.1200.
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