Dollar Gains On Favorable US Jobs Data

05-11-2014 22:22:11
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The dollar strengthened against most of its peers today following the release of data which highlighted an increase in private sector hiring for October which was greater than forecasts. ADP released reports that non-farm private employment increased by 230,000 above forecasts of 220,000. The number of jobs created in September was amended from 213,000 to 225,000.


The euro weakened against the dollar with the pair trading near a 2 year low as the market looks towards the European Central Bank’s announcement on Thursday regarding monetary policy and interest rates. Broad consensus is that the ECB will not introduce new stimulus programs but following the Bank of Japan’s shocking monetary easing measures last week some feel that the ECB could soon take similar action in order to trigger growth and avoid risk of deflation in the euro zone.


The pound weakened against the dollar with the pair trading close to 1 year lows to then regain some ground following a report which revealed that the UK service sector grew at a 17 month low in October, increasing concerns that economic recovery is lagging. Markit released figures that the UK services PMI dropped to 56.2 in October from 58.7 in September.


The yen weakened against the dollar following solid US private sector jobs figures with the pair trading near 7 year highs. The yen remained lower leading up to the announcement from the Bank of Japan and was virtually unaffected by remarks made by Bank of Japan Governor Kuroda who stated that the Japanese economy is positively affected by a weaker yen. The yen was weaker against the euro and the pound.


The Australian and New Zealand dollars weakened considerably against the dollar. Earlier in the session a drop in global oil prices put pressure on the Canadian dollar which sent USD/CAD beyond 5 year highs which were later retraced as the Canadian surged higher.


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