Daily Afternoon Report 06.11.2015

The dollar rallied to six-month highs against the other major currencies on Friday, after the release of strong U.S. employment data added to expectations for a December rate hike by the Federal Reserve.

The dollar rallied against the euro, with EUR/USD down 1.32% at six-month lows of 1.0738.

The U.S. Labor Department said the economy added 271.000 jobs last month, exceeding expectations for a 180.000 rise. The U.S. economy added 137.000 jobs in September, whose figure was revised from a previously estimated increase of 142.000.

The U.S. unemployment rate ticked down to 5.0% in October from 5.1% the previous month. Analysts had expected the unemployment rate to remain unchanged last month.

The report also showed that average hourly earnings rose 0.4% last month, more than the expected 0.2% gain, after a flat reading in September.

The strong data added to expectations for the U.S. to raise interest rates after Fed Chair Janet Yellen said on Wednesday that a December rate hike is a “live possibility,” depending on economic data.

USD/JPY climbed 0.82% to trade a two-and-a-half-month peak of 122.72.

Earlier Friday, Bank of Japan Governor Haruhiko Kuroda warned that a deeper-than-expected slowdown in China and other emerging economies was the biggest risk facing Japan’s economic outlook.

Kuroda added that the BOJ will not hesitate to ease its monetary policy if necessary to support the economy, although he said Japan can hit the central bank’s 2% inflation target without additional stimulus for now.

Elsewhere, the dollar pushed higher against the pound and the Swiss franc, with GBP/USD down 1.03% at a six-month low of 1.5140 and with USD/CHF advancing 0.97% to 1.0050.

Markets shrugged off a report by the U.K. Office for National Statistics showing that manufacturing production rose 0.8% in September, beating expectations for a 0.4% gain.

The report also showed that U.K. industrial production fell 0.2% in September, compared to expectations for a 0.1% downtick.

Another report showed that the U.K. trade deficit narrowed to £9.35 billion in September from a revised deficit of £10.79 billion in August. Analysts had expected the trade deficit to narrow to £10.60 billion in September.

The Australian and New Zealand dollars were weaker, with AUD/USD down 0.98% at 0.7075 and with NZD/USD tumbling 1.32% to 0.6527.

Meanwhile, USD/CAD gained 0.71% to trade at 1.3256 after Statistics Canada reported that the number of employed people rose by 44.400 in October, beating expectations for a 10.000 gain and after an increase of 12.100 the previous month.

Canada’s unemployment rate ticked down to 7.0% last month from 7.1% in September, compared to expectations for an unchanged reading.

A separate report showed that Canada’s building permits dropped 6.7% in September, confounding expectations for a 1.3% rise. Building permits declined by 3.6% in August, whose figure was revised from a previously estimated 3.7% drop.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 1.17% at 99.23, the highest level since April.