Dollar Rebounds After U.S. Nonfarm Payrolls Data

The U.S. dollar trimmed its losses against its major counterparts in the European session on Friday, as the U.S. wage growth accelerated to the most since 2009, despite slowing job growth last month.

Data from the Labor Department showed that non-farm payroll employment climbed by 156,000 jobs in December, while economists had expected an increase of about 175,000 jobs.

While the increase in employment in November was upwardly revised to 204,000, the increase in employment in October was downwardly revised to 135,000, reflecting a net addition of 19,000 jobs.

The report also said the unemployment rate inched up to 4.7 percent in December from 4.6 percent in November, matching economist estimates.

Additionally, the Labor Department said the annual rate of growth in average hourly employee earnings accelerated to 2.9 percent from 2.5 percent.

U.S. treasury yields also rose, with the benchmark yield on 10-year note rising 2.41 percent and that of 2-year equivalent was up by 1.21 percent. Yields move inversely to bond prices. A separate report from the Commerce Department showed that the U.S. trade deficit widened more than expected in November, as imports rose and exports fell.

The report said the trade deficit widened to $45.2 billion in November from a revised $42.4 billion in October. The trade deficit had been expected to widen to $44.5 billion.

Investors await factory orders and durable goods orders data due shortly, for more indications about the economic outlook.

The greenback was lower on Thursday as the Fed minutes signaled uncertainty about the impact of Trump's fiscal policies on the economy and as data showed that private payroll growth slowed in December.

The currency fell 1.13 percent against the euro, 1.6 percent against the yen, 1.1 percent against the Swiss franc and 0.7 percent against the pound for the day.

The greenback that declined to a weekly low of 1.0622 against the euro in the immediate aftermath of the data rebounded to 1.0546 soon afterwards. The greenback is seen finding resistance around the 1.03 mark.

Survey results from European Commission showed that Eurozone economic confidence strengthened to the highest level in more than five years in December.

The economic sentiment index improved to 107.8 in December from 106.6 in November. This was the highest since March 2011, when the reading was 108.3.

The greenback climbed to 116.44 against the Japanese yen, following more than a 3-week low of 115.07 set early in the Asian session. The next possible resistance for the greenback-yen pair is seen around the 118.00 region.

Preliminary report from the Ministry of Health, Labor and Welfare showed that Japan's total labor cash earnings in Japan increased for the second straight month in November, in line with expectations.

Gross earnings climbed 0.2 percent year-over-year in November, following a 0.1 percent rise in October. The figure also matched consensus estimate

Reversing from an early low of 1.0094 against the Swiss franc, the greenback advanced to 1.0163. Continuation of the greenback-franc's uptrend may see it challenging resistance around the 1.03 level.

The greenback, having fallen to 1.2430 against the pound at 6:45 pm ET, reversed direction with the pair trading at 1.2330. If the greenback extends rise, it may locate resistance around the 1.22 area.

The greenback bounced off to 0.7307 against the aussie and 0.6986 against the kiwi, from its previous low of 0.7355 and a 3-week low of 0.7043, respectively. On the upside, the greenback is likely to challenge resistance around 0.70 against the aussie and 0.67 against the kiwi.

On the flip side, the greenback declined to more than a 3-week low of 1.3179 against the loonie, as the latter was buoyed by domestic economic data. Further weakness may take the greenback to a support around the 1.30 mark.

Data from Statistics Canada showed that employment rose by 54,000 in December, defying expectations for a fall of 5,100 jobs. In November, the employment increased by 10,700.

Looking ahead, at 11.15 am ET, Chicago Federal Reserve Bank President Charles Evans discusses monetary policy on a National Association for Business Economics and American Economic Association conference panel in Chicago, with audience and media Q&A.

Prepared remarks of Richmon Fed President Jeffrey Lacker on 2017 economic outlook will be presented at the Maryland Bankers Association Forum in Baltimore by his Director of Research at 1.00 pm ET.