(MENAFN - Kuwait News Agency (KUNA)) The US dollar opened the week on a strong footing against most of its counterparts as figures from the manufacturing sector signaled that the economy is not losing steam, a specialized report said here Sunday.
Additionally, according to the report by the National Bank of Kuwait (NBK), the greenback continued its momentum as economic data from the Euro area and the UK disappointed the market.
However, last Friday, the currency weakened dramatically as figures from the labor market missed market expectations, adding concerns over the US economy and fuelling the possibility of further easing from the Federal Reserve.
On the commodities side, US crude oil dropped more than 4% to reach USD 97.
97 a barrel, breaking below USD 100 for the first time since February after a weak US jobs report and disappointing economic data from the Euro zone that pointed to a deeper recession across the region. Oil closed the week at USD98.
51, the report indicated.
As for the US manufacturing sector, the report said it grew in April "at the fastest pace" in almost a year, boosted by a pickup in orders that indicates that the sector will remain as a major source of strength for the US economic recovery.
The US job report indicated that employers in the US added fewer jobs than expected in April and the jobless rate unexpectedly declined as people are leaving the labor force, fuelling concerns that the world's largest economy may be losing steam. Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 rise in March.
Additionally, initial jobless claims fell by 27,000 to 365,000 from the previous week's upwardly revised figure of 392,000. Economists expected that claims would fall to 380,000. That was the biggest drop since May 2011. Despite the drop in new claims, the 4-week moving average edged up by 750 to 383,000 claims, the highest since December. Earlier in the week, hiring by private employers slowed down in April, recording the smallest gain since September 2011.
The ADP Employment Index showed that the private sector hired 119,000 versus the expected 177,000 and lower than the previous 201,000, the report showed.
Across the Atlantic, the European Central Bank held its main interest rate at 1.0% as elevated inflation reduced pressure to loosen borrowing costs further to support the weak Euro zone economy.
In a press conference after the decision, the European Central Bank President Mario Draghi said that interest rates remain accommodating and policy makers still anticipate a gradual economic recovery this year, even as recent data adds more uncertainty to the economic outlook. He also said, "We didn't discuss any specific move in interest rates but we did discuss our general monetary policy stance, which we found accommodative in view of an economic outlook that becomes more uncertain.
" Euro zone unemployment rose to the highest in almost 15 years, signaling that the economy continues to weaken. The jobless rate in the 17-nation euro area rose to 10.9% in March from 10.8% a month earlier, the report added.
Euro zone manufacturing plunged in April, after rising in January and February, to the lowest in almost three years.
The Purchasing Managers Index (PMI) showed that manufacturing activity has contracted for nine straight months, indicating that the downturn in the sector that started in the peripherals is starting to spread among central members France and Germany. The Manufacturing PMI dropped to 45.9 from 47.7 in March slightly below market expectations.
European retail sales unexpectedly increased in March as consumers in Germany and France helped offset slumping demand in the region's periphery nations. Sales rose 0.3% from February, when they dropped to 0.2%.
In the United Kingdom, manufacturing expanded at a slower pace than estimated in April as the economic slowdown in the Euro zone restrained demand for British goods, increasing the risk of a longer recession.
The unexpected drop will also fuel a debate over the possibility of further quantitative easing from the Bank of England, after central bankers hinted that they might not extend their asset purchases later this month given a number of stronger economic data. The Manufacturing PMI dropped to 50.5 in April from 51.9 and lower than the expected drop to 51.4, the report concluded.