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    U.S. Dollar Strengthened on Optimistic Fed Remarks

    The greenback ticked up against its major peers on Friday, as statements by a Fed official signaled that interest rates could still rise sooner than expected, despite a downbeat U.S. non-farm payrolls report.

    The U.S. dollar index edged higher 0.11% to 93.83 late Friday. The index finished the week with 0.89% gains, after recovering from the 91.91 low reached on Tuesday, its lowest level since January 2015.

    Official statistics from the U.S. Labor Department showed earlier that the economy added 160,000 new jobs in April - the smallest rise since September - disappointing expectations for a 202,000 increase. The unemployment rate was unchanged at 5%.However, the average hourly earnings increased by 0.3%, marking a year-over-year increase to 2.5% from 2.3% in March.

    The weak jobs data added to concerns that the U.S. economy is losing momentum, following a Commerce Department report last week, showing that the economy grew at the slowest pace in two years from January to March. As a result, investors abandoned expectations for a June rate hike, with most seeing the next interest rate rise coming in September.

    Nevertheless, the New York Fed President William Dudley stated on the same day that it is reasonable to anticipate two rate hikes in 2016, despite the poor data showing that jobs increased at the slowest pace in seven months.

    The single currency finished the day little changed against the greenback, with EUR/USD at 1.1404, below the eight-month peak of 1.1616 hit on Tuesday.

    Meanwhile, the British pound dropped to two-week lows, with GBP/USD falling 0.39% to 1.4430, amid rising concerns over the outcome of the referendum on the U.K.’s European Union membership on the 23rd of June 2016.

    The greenback ticked down against the Japanese yen late Friday, with US/JPY at 107.11, recovering from the 18-month low of 105.54 reached on Tuesday.

    The Aussie fell 1.31% against the dollar at 0.7367, after dropping to two-month lows of 0.7337 earlier. The Australian dollar finished the week losing 3.24% after the Reserve Bank of Australia trimmed interest rates for the first time in more than a year in response to the falling commodity prices.

    Elsewhere, the Loonie fell to one-month lows, following the release of a report indicating that the Canadian economy lost 2.1000 jobs in April and as a huge fire in Alberta clouded the prospects of the economy. The USD/CAD pair climbed to highs of 1.2952, before settling at 1.2908.

    On Monday, the U.S. dollar ticked up against the Japanese yen, while weak Chinese trade figures from China had a minor impact on the Australian dollar. The greenback rose 0.2% against the yen to 107.30. The dollar index last traded at 93.847.

    Investors will be awaiting Bank of Japan’s April policy meeting minutes, after policymakers surprised markets by not undertaking further stimulus measures. Germany is poised to publish data on factory orders, while the U.K. will release an industry report on house price inflation later in the day.  

    In the week ahead, market participants will be monitoring Thursday’s Bank of England’s data release and Friday’s data on U.S. retail sales, producer prices and consumer sentiment for new indications on the state of the world’s largest economy. 

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