US dollar foreign exchange rate against the wall again after US jobs data

Published on March 5, 2011 by   ·   No Comments
US dollar foreign exchange rate against the wall again after US jobs data

The US dollar’s foreign exchange rate was lower against the euro on Friday but clawed back from its worst losses, as the US jobs market rebounded and US unemployment fell below 9% for the first time in nearly two years.

US Dollar v Euro

The euro reached session lows against the US dollar in volatile trading following the data, where the euro resumed its recent bull run by rising above $1.4000 for the first time since November. The euro also came back down slightly against the yen after it rose to its highest level against that currency since last May.

US Nonfarm payrolls rose by 192,000 last month as private-sector employers added 222,000 jobs, the US Labor Department said Friday. The unemployment rate fell to 8.9% last month, the first time it dipped below 9% since April 2009.

The reason the US dollar fell is that many traders were inclined to feel optimistic about the state of the US jobs market after the weekly unemployment claims indicator Thursday showed that claims fell to 368,000 in the week ended 26th February, from 388,000 the week before.

But if you drill down into the new US jobs report, it reveals the jobless rate shift was accomplished the old fashioned way, via real hiring, said Brian Kim, currency strategist at UBS in Stamford. It wasn’t accomplished rather by the American people giving up on finding work, said Kim.

“If you actually dig into the data, it doesn’t look too bad.” said Kim. “There are some positives that the US dollar can hang its hat on.” he said.

That said, Friday’s release was expected to provide only short term relief to the US dollar, because it essentially did not alter any medium term trends that currently define the foreign exchange market and do not favor the US dollar, said analysts.

The euro was recently trading at $1.3992 against the dollar, compared with $1.3967 late in New York Thursday, according to EBS via CQG. The dollar was at Y82.30 from Y82.44.

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