Dollar falls against most major currencies due to surprising U.S. jobs data - Sep 3

Although the greenback edged lower in Asia and fell to an intra-day low of 84.17, dollar rebound from there and rose to 84.53 on jitters over potential for intervention. Later, the greenback jumped immediately after the release of better-than-expected key U.S. jobs data and rallied to 85.23. However, dollar retreated from there on profit-taking together with cross buying in yen versus other European currencies and fell sharply to 84.23 after the release of much weaker-than-expected U.S. ISM manufacturing and then traded narrowly in NY afternoon.

U.S non-farm payrolls in August showed a drop of 54K jobs versus the forecast of -100K. However, private sector posted an increase of 67K versus the forecast of +41K, suggesting employers were beginning to hire more people even during the summer month, allaying recent market concern that the world's largest economy may be moving back into recession and boosting appetites for higher-yielding currencies such as the Australian dollar.

U.S. ISM manufacturing PMI data came in at 51.5 versus the economists' forecast of 53.5 and the previous reading of 54.3 in July.

In other news, Ichiro Ozawa, who is challenging Japanese PM Naoto Kan in DPJ's presidential election, said on a TV Asahi program that intervention in currency markets to stem the yen's appreciation was a possibility. He also added Japan could also use the strong yen to secure resources globally.

Although the single currency moved narrowly in Asia and fell to 1.2808 in Europe, euro rebounded from there on slightly stronger-than-expected eurozone services PMI, which came in at 55.9 versus the expectations of 55.6, and rose to 1.2854 in Europe. Later, despite euro's brief drop to 1.2814 after the release of better-than-expected key U.S. jobs data, buying interest emerged at there and euro rose to an intra-day high of 1.2898 in NY afternoon due to the strength in DJI (DJI closed the day at 10448, up by 128 points or 1.24%) together with active cross buying in euro.

On data front, eurozone retail sales rose by 0.1% m/m and 1.1% y/y, versus the expectations of 0.2% and 0.6% respectively.

Earlier in Asia, the single currency was supported after the release of Chinese PMI for service sector, as Chinese services PMI by HSBC rose to a 4-month high at 57.6 in August from the previous reading of 56.3.

The British pound edged higher from 1.5391 in Asia after Thursday's selloff to 1.5350 and climbed to 1.5452. Later, despite cable's brief but sharp fall to 1.5392 after the release of much weaker-than-expected U.K. Services PMI (U.K. CIPS services PMI came in at 51.3, much weaker than economists' forecast of 52.9), sterling rebounded strongly in reaction to strong U.S. jobs data and rose to 1.5469 ahead of NY closing.

The commodity currencies rose strongly on Friday, as the Australian dollar and the New Zealand dollar rallied from 0.9066 to 0.9176 and 0.7132 to 0.7220. Usd/cad tumbled from 1.0569 to 1.0381.

Economic data to be released next week include:

Japan BoJ 2-day meeting (U.S. and Canada are closed for holiday) on Monday, U.K. BRC retail sales, Australia RBA rate decision, Japan Leading indicators, BOJ rate decision, Swiss Jobless rate, Germany Factory orders on Tuesday, Japan Trade balance (jpy), Current account, Machine orders, Economic watch DI, Germany Trade balance (euro), Export, Import, Industrial prod'n, U.K. BRC shop price index, Industrial prod'n , Manufacturing prod'n, Canada Building permits, BOC rate decision, Ivey PMI, U.S. Fed's Beige Book on Wednesday, Australia Employment change , Unemployment rate, Japan Consumer confidence, Germany CPI final, HICP final, U.K. Trade balance (gbp), BOE rate decision, BOE Asset Purchase Target, U.S. Trade balance (usd), Jobless claims, Canada Housing starts, Trade balance (cad), Exports, Imports, New housing price index on Thursday, Japan Domestic CGPI, GDP Rev. , U.K. PPI core, PPI input, PPI output, Canada Unemployment rate, Jobs-change, U.S. Wholesale inventories on Friday.