Investing - The dollar turned broadly lower against the other major currencies on Friday after disappointing U.S. employment data saw investors reassess expectations over the timing of a pullback in the Federal Reserve’s stimulus program. The Department of Labor said the U.S. economy added 169,000 jobs in August, fewer than the 180,000 forecast by economists. The unemployment rate ticked down to a four-and-a-half year low of 7.3% from 7.4% in July, but this was partially due to more people dropping out of the labor force. The report also said that job growth in July was revised down to 104,000 from 162,000, while June’s figure was revised down to 172,000 from 188,000. The dollar came under pressure amid renewed uncertainty over whether the Fed will start to unwind its USD85 billion-a-month asset purchase program at its upcoming policy meeting on September 17-18. Fed Chairman Ben Bernanke has said that the decision to begin tapering will depend on whether economic data is strong enough. The euro recovered from seven week lows against the dollar following the report, with EUR/USD rising 0.47% to 1.3181 at the close of trade, paring the week’s losses to just 0.07%. The dollar was sharply lower against the yen, with USD/JPY falling as low as 98.53, the lowest since September 2, before trimming losses to settle at 99.10, down 0.98% for the day and ending the week 0.47% lower. The pound hit two-week highs of 1.5681 against the dollar before paring gains to settle at 1.5627, 0.26% higher for the day and 0.55% higher for the week. The dollar was also weaker against the Swiss franc, with USD/CHF down 0.81% to 0.9374 at the close, trimming the week’s gains to 0.28%. Safe haven demand for the yen and the Swiss franc was supported amid ongoing tensions over possible military intervention against Syria. On Friday Russian President Vladimir Putin warned the U.S. against launching military action against the Syrian government without U.N. approval. Earlier in the week, stronger-than-expected manufacturing data out of China, the U.K. and the euro zone had bolstered optimism over a broad based global recovery and propelled the dollar to multi-week highs against the yen and the euro. In the week ahead, the dollar looks likely to remain under pressure ahead of the outcome of the Fed’s upcoming policy meeting later in the month. Investors will be looking ahead to Friday’s U.S. data on retail sales and consumer sentiment for indications on the strength of the economic recovery. An interest rate decision by the Reserve Bank of New Zealand will also be in focus. Ahead of the coming week, Investing has compiled a list of these and other significant events likely to affect the markets.
Posted on: Sun, 08 Sep 2013 17:21:22 +0000
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