(New throughout; changes dateline, previous LONDON)
By Kate Duguid
NEW YORK, June 5 (Reuters) - The dollar was modestly higher on Friday morning after payrolls data showed the U.S. labor market unexpectedly improved in May, but the currency’s gains remained capped by continued uncertainty about the state of the domestic economy.
The Labor Department’s employment report on Friday showed the jobless rate falling to 13.3% last month from 14.7% in April, a post World War Two high. It followed on the heels of surveys showing consumer confidence, manufacturing and services industries stabilizing. Economic conditions have significantly improved as businesses reopened after shuttering in mid-March to slow the spread of COVID-19.
The U.S. dollar index rose following the payrolls report, though in late morning trade had pared some of those gains to last trade around 96.79, up 0.03%. The dollar was 0.24% stronger against the euro, last up 0.20% to $1.131. Against the safe-haven Japanese yen, the dollar was up 0.49% to 109.66 yen.
“Today you’ve seen better-than-expected economic data coming out of the U.S. in terms of the jobs numbers,” said Chuck Tomes, portfolio manager at Manulife Asset Management.
“The reaction on the back of that has been expectations of better growth coming out of the U.S. as well as a steepening yield curve. Both of which have provided a lift to the dollar.”
He noted, however, that the uncertainties about the economic outlook and the possibilities of a second wave of infections had capped the greenback’s gains.
“When we look at the uncertainties surrounding the numbers that probably warrants a somewhat range-bound environment for a little bit of time.”
The dollar’s strengthening was also less visible against the euro, and in the dollar index which heavily weights the euro, after the single currency rose following the European Central Bank’s announcement Thursday that it was expanding its stimulus program.
The euro remains on course for a weekly jump of just under 2%, its third straight weekly rise, although it may not log a ninth consecutive day of gains, which would be its longest rising streak since October 2004. (Reporting by Kate Duguid in New York and Julien Ponthus in London Editing by Chris Reese)