Volkswacht Bodensee - Euro closes in on dollar parity

The haven yen firmed against the dollar following the assassination of Japan's former prime minister, Shinzo Abe, before falling back.

Wall Street stocks opened lower after a report that showed that the US economy continued to add jobs in June at a rapid pace.

There were 372,000 new positions added in the month, the Labor Department reported, far more than economists expected.

The strong health of the jobs market gives the US Federal Reserve more of a free hand to raise interest rates sharply to combat soaring inflation without worrying about the economy tipping into recession.

Concern by investors that the fast pace of monetary tightening by the Fed will tip the world's top economy into recession has seen stocks swoon in recent weeks.

US Treasury yields rose following the publication of the US jobs report, an indication of an expectation of higher interest rates.

"That move is the reaction to an employment situation report for June that did nothing to deter the market from thinking that the Fed is going to remain on an aggressive rate-hike path," said market analyst Patrick J. O'Hare at Briefing.com.

The euro on Friday slumped to $1.0072, a fresh 20-year low, before recovering back above $1.01.

"The depreciation in the euro to its lowest level in almost two decades against the dollar this week in large part reflects investors’ view that the ECB will tighten less aggressively than the Fed," said Jessica Hinds, senior Europe economist at Capital Economics.

In commodities trading on Friday, world oil prices rose following the publication of the US jobs report comforted worries about the health of the economy, and demand for oil.

The rise comes at the end of yet another volatile week for crude and assets in general as investors fears recession fears aggravated and faded.

Asian stock markets closed higher, boosted by hopes that US President Joe Biden would remove some tariffs from Chinese goods.

Equities won a lift also from reports Beijing was considering a huge stimulus push to the struggling Chinese economy by allowing local governments to raise billions of dollars through bond issuance for infrastructure projects.

But surging inflation, rising interest rates and a fresh flare-up of Covid infections in Shanghai continued to keep investor sentiment grounded.

- Political upheaval -

Markets are also tracking political unrest in Britain and Japan.

London's benchmark FTSE 100 index was down 0.1 percent in afternoon deals -- and the pound retreated -- one day after Prime Minister Boris Johnson said he was stepping down later this year following a string of scandals.

In Japan, Abe was assassinated on Friday by a gunman who opened fire at close range as the hugely influential politician delivered a campaign speech ahead of upper house elections.

The murder of the 67-year-old, who had been Japan's longest-serving leader, stunned the nation and prompted an international outpouring of grief and condemnation.

The killing "could be negative for markets if the government's policy, including its stance on monetary easing, is affected, as it was evident that he was pulling the strings behind the scenes in many ways", noted Masahiro Yamaguchi at SMBC Trust Bank.

"If it becomes possible for (current Prime Minister Fumio) Kishida to carry out policies he wanted to, such as financial tax and regulations on share buy-back, that would be negative for markets."

- Key figures at around 1330 GMT -

Euro/dollar: UNCHANGD from Thursday at $1.0162

Pound/dollar: DOWN at $1.2007 from $1.2024

Euro/pound: UP at 84.62 pence from 84.49 pence

Dollar/yen: UP at 136.41 yen from 136.01 yen

London - FTSE 100: DOWN 0.1 percent at 7,179.84 points

Frankfurt - DAX: UP 0.7 percent at 12,935.13

Paris - CAC 40: DOWN less than 0.1 percent at 6,004.75

EURO STOXX 50: DOWN less than 0.1 percent at 3,485.26

New York - Dow: DOWN 0.2 percent at 31,336.43

Tokyo - Nikkei 225: UP 0.1 percent at 26,517.19 (close)

Hong Kong - Hang Seng Index: UP 0.4 percent at 21,725.78 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,356.08 (close)

Brent North Sea crude: UP 2.1 percent at $106.81 per barrel

West Texas Intermediate: UP 2.2 percent at $104.96 per barrel

M.Odermatt--BTB