• U.S. job growth surged more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite sluggish wage gains.
That was the second biggest payrolls increase this year and beat economists' expectations for a 179,000 rise. The economy also created 47,000 more jobs in April and May than previously reported. While the unemployment rate rose to 4.4 percent from a 16-year low of 4.3 percent in May, that was because more people were looking for work, a sign of confidence in the labor market.
Average hourly earnings increased four cents, or 0.2 percent, in June after gaining 0.1 percent in May. That lifted the year-on-year wage increase to 2.5 percent from 2.4 percent in May, suggesting some slack still remains in the labor market.
• The dollar gained on Friday after a report showed the U.S. economy created far more jobs than expected in June and previous months, keeping the Federal Reserve on track to raise interest rates at least one more time this year.
Following the report, the dollar rose to two-month highs against the yen, in its largest weekly percentage gain since late April. The greenback also climbed to a more than one-week peak against sterling.
- The dollar was last at 113.95 yen, up 0.7 percent, after earlier reaching a two-month high of 114.17 yen.
- The yen also slid earlier on Friday after the Bank of Japan said it would buy an unlimited amount of bonds, as it sought to put a lid on domestic rates pushed higher by the broad sell-off in developed market bonds.
- The euro was last at $1.1403, down 0.2 percent. That pushed the dollar index up 0.2 percent to 96.0132
- Sterling fell to a more than one-week low of $1.2871 and was last down 0.7 percent at $1.2883.
• The Federal Reserve defended having the flexibility to set interest rates without new scrutiny from Capitol Hill in its semiannual report to Congress on Friday, warning of potential hazards if it were required to adopt a rule to guide monetary policy.
• The Federal Reserve stuck to its script in its semiannual monetary policy report, forecasting a gradual increase in interest rates and the imminent, if gentle, winddown of its balance sheet in the face of an economy that’s still expanding eight years into a recovery.
The Fed on Friday said it expects a “gradual” increase in interest rates and for balance-sheet normalization to begin this year. That’s the same assessment the Federal Open Market Committee gave after its June meeting, and comes ahead of Federal Reserve Chairwoman Janet Yellen’s testimony on Capitol Hill next week. Yellen testifies before a House panel on Wednesday, and moves to the Senate on Thursday.
• Secretary of State Rex Tillerson told reporters at a summit of leaders of the Group of 20 major economies in Hamburg that Trump had "positive chemistry" with Putin during the meeting, which lasted some two hours and 15 minutes.
The two leaders spent a lot of time discussing Syria, and after their meeting an agreement between the United States, Russia and Jordan on a ceasefire in southwestern Syria was announced.
"President Putin and I have been discussing various things, and I think it's going very well," Trump told reporters, sitting alongside the Russian leader.
"We've had some very, very good talks. ... We look forward to a lot of very positive things happening for Russia, for the United States and for everybody concerned. And it's an honor to be with you."
• U.S. President Donald Trump hailed progress on trade after meeting his Mexican counterpart on Friday, as Mexico's government said it expected a general agreement on reworking the North America Free Trade Agreement (NAFTA) by the end of 2017.
• Oil prices settled nearly 3 percent lower on Friday as rising U.S. production as OPEC exports hit a 2017high cast doubt over efforts by producers to curb global oversupply.
- Brent crude LCOc1 settled down $1.40, or 2.9 percent, at $46.71 a barrel, after falling to $46.28, its lowest in more than a week.
- U.S. West Texas Intermediate (WTI) crude futures CLc1 finished $1.29, or 2.8 percent, lower at $44.23 a barrel, after trading as low as $43.78.
Both benchmarks posted a sixth weekly decline in the past seven weeks with WTI down 3.9 percent on the week and Brent off 2.5 percent.
• "The stream of relentless supply continues," said Matt Smith, director of commodity research at Clipperdata.
He said OPEC exports were 2 million barrels per day (bpd)higher in June than in 2016, despite of an extension of a 1.8 million bpd production cut deal led by the Organization of the Petroleum Exporting Countries.
Reference: Reuters, WSJ, Market Watch
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