The dollar weakened against most of its peers on Friday following poor jobs data for October which triggered a selloff in dollar profit taking. The US Department of Labor released figures which showed that there was an increase of 214,000 jobs in October just shy of forecasts of an increase of 231,000. Figures also indicated that the US employment rate dropped by 5.8% in October.


Recently the dollar has strengthened to 4 year highs as the market anticipates stricter policy from the Fed while the European Central Bank and Bank of Japan becomes more flexible. Although not entirely discouraging the data released out of the US gave the market time to reassess when the Fed will increase rates making leeway for dollar profit taking.


The euro strengthened against the dollar coming off 26 month lows as a result of dollar profit taking. The pair set a new 26 month low immediately after the release of US data but then surged by nearly 100 pips. The euro was still weighed down by remarks made by ECB President Draghi confirming that the central bank will begin buying asset backed securities shortly. The euro was stronger against the yen.


The pound strengthened against the dollar coming off 14 month lows following US jobs data. The Bank of England the day before decided to keep interest rates unchanged at its record low of 0.5% as was broadly expected and the pound stayed under pressure following surveys of the UK service and manufacturing sectors published earlier in the week which intensified fear that economic recovery is lagging. The pound was weaker against the euro.


The yen strengthened against the dollar coming off 7 year lows following worse than forecast US jobs data. The pair closed out the week adding 1.56% still under pressure from the Bank of Japan?s unexpected policy announcement which shocked the market on Halloween. The BOJ plans to extend its balance sheet by 15% of GDP each year and increase span of its bond buying program from 7 to 10 years.


The Canadian, Australian and New Zealand dollars strengthened against the US dollar following the US data. Better than forecast Canadian employment figures also boosted the loonie. The Australian dollar regained ground coming off a more than 4 year low as the Reserve Bank of Australia kept its interest rate unchanged at an historic low of 2.5% announcing that borrowing costs will stay down for the time being.


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