European Session –Dollar drops in knee-jerk reaction to nonfarm payrolls
February 7, 2014 2:44 pm
The event-filled week culminated with the US jobs report which unexpectedly reported a lower-than-expected result. Some analysts blame the extreme weather conditions that hit the United States as a reason behind the soft employment numbers.
The nonfarm payrolls (NFP) report showed that 113,000 jobs were created in January, missing forecasts for a 185,000 print, with the unemployment rate edging lower to 6.6% from a prior 6.7%. December’s figure was upwardly revised from 74,000 to 75,000.
Despite January’s number being higher than December’s, investors reacted negatively to the data and sold off the dollar.
The dollar plunged over 100 pips against the yen immediately after the data to reach a low of 101.42 from a pre-data high of 102.52. The knee-jerk reaction did not last long however and the dollar crept back up to rise above the key 102.00 level.
On the other side of the US border, Canada reported better jobs data. The Canadian economy added 29,400 jobs in January, versus 19,700 expected, and more than the previous month’s loss of 45,900 jobs.
The loonie jumped to a 2 1/2 week high of 1.0986 against the greenback after the contrasting jobs data from the two countries and continued to extend gains.
The euro reversed earlier losses against the dollar and surged to a high of 1.3636 after the NFP data before ending the session with a 0.07% gain to 1.3595. The euro had fallen to a low of 1.3551 early in the European session on the back of disappointing German industrial production data, which was worse than estimates at -0.6%.
The British pound ended with a 0.17% gain against the dollar at 1.6359 after a volatile session, swinging from a low of 1.6300 to a high of 1.6392. Sterling plummeted earlier in the session after soft UK data. Manufacturing production grew lower-than-expected in December, at 0.3% versus 0.6% forecast. This raised concern that the sector was unlikely to help drive the pace of recovery further. Sterling weakness could resume before next week’s Bank of England quarterly inflation report due on February 12th.
The Australian dollar benefited from the weaker US dollar after the NFP data, with aussie gaining 0.41% to end the session at 0.8986. After the knee-jerk reaction to the US jobs data, investors are expected to digest the data and the NFP report could end up having few lasting consequences.
The event-filled week culminated with the US jobs report which unexpectedly reported a lower-than-expected result. Some analysts blame the extreme weather conditions that hit the United States as a reason behind the soft employment numbers.
The nonfarm payrolls (NFP) report showed that 113,000 jobs were created in January, missing forecasts for a 185,000 print, with the unemployment rate edging lower to 6.6% from a prior 6.7%. December’s figure was upwardly revised from 74,000 to 75,000.
Despite January’s number being higher than December’s, investors reacted negatively to the data and sold off the dollar.
The dollar plunged over 100 pips against the yen immediately after the data to reach a low of 101.42 from a pre-data high of 102.52. The knee-jerk reaction did not last long however and the dollar crept back up to rise above the key 102.00 level.
On the other side of the US border, Canada reported better jobs data. The Canadian economy added 29,400 jobs in January, versus 19,700 expected, and more than the previous month’s loss of 45,900 jobs.
The loonie jumped to a 2 1/2 week high of 1.0986 against the greenback after the contrasting jobs data from the two countries and continued to extend gains.
The euro reversed earlier losses against the dollar and surged to a high of 1.3636 after the NFP data before ending the session with a 0.07% gain to 1.3595. The euro had fallen to a low of 1.3551 early in the European session on the back of disappointing German industrial production data, which was worse than estimates at -0.6%.
The British pound ended with a 0.17% gain against the dollar at 1.6359 after a volatile session, swinging from a low of 1.6300 to a high of 1.6392. Sterling plummeted earlier in the session after soft UK data. Manufacturing production grew lower-than-expected in December, at 0.3% versus 0.6% forecast. This raised concern that the sector was unlikely to help drive the pace of recovery further. Sterling weakness could resume before next week’s Bank of England quarterly inflation report due on February 12th.
The Australian dollar benefited from the weaker US dollar after the NFP data, with aussie gaining 0.41% to end the session at 0.8986.
After the knee-jerk reaction to the US jobs data, investors are expected to digest the data and the NFP report could end up having few lasting consequences.
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