USD tumbles to a 14-month low against the Euro.
•Eurozone PMI data stronger than expected in January.
•Commodity currencies lower against the dollar after the release of stronger US domestic data.
USD - The dollar tumbled to a 14-month low against the euro after the Labor Department announced that the U.S. added 157,000 jobs last month, while an upward revision was made to November and December numbers adding 127,000 more jobs. Despite the positive data, the unemployment rate ticked up 0.1 percent to 7.9 percent. The jobs data cements expectations that the Federal Reserve will maintain its simulative policy, leaving rates on hold until unemployment reaches 6.5 percent. The US non-farm payrolls rose .10%, while the ISM manufacturing report showed an increase to 53.1 in January from 50.2 in December. The Fed’s bond-buying and loose monetary policies have pressured the dollar and analysts said the dollar will maintain a negative bias as long as the US central bank continues on that path.
EUR - The euro is stronger against the dollar, reaching a 14th month-high after Eurozone PMI came in higher than expected at 47.9. Although the Eurozone is still in contraction mode, the region’s CPI came in softer than expected at 2.0%. Despite the ECB announcing that 27 banks will repay a total of €3.5bn, the euro continued to push higher. With market psychology digesting the fact that the worst of the European debt crisis is over, look for the euro to test the next key level of $1.37.
GBP - Sterling fell 0.8 percent against the dollar and fell to a 15 month low against the euro after the release of better-than-expected euro zone manufacturing data. With the market focusing on the potential for additional quantitative easing coupled with the possibility that the UK’s triple-A credit rating may be at risk, look for sterling to continue to remain under pressure weakening further.
JPY - The yen remained under pressure weakening 0.4 percent against the dollar as traders broke through option barriers at the 92.00 level against the dollar and 125.00 level versus the euro. With Japanese Prime Minister Shinzo Abe continuing to call for aggressive monetary easing from the Bank of Japan, look for USD/JPY to continue to weaken.
Commodity Currencies - The commodity currencies is lower against the dollar after the release of stronger US domestic data. The CAD lowered against its US counterpart today after US domestic data showed steady jobs growth. The Canadian Federal Reserve’s lax stance on changing its accommodative monetary stance also limited the currency’s move. Expect the CAD to hold resistance in the 0.9902 range through the weekend, as market participants look forward to Canada’s employment report due at the end of next week. The AUD hit a one-month low against the greenback on Friday after China PMI data for January came in slightly weaker than expected. Expect the AUD to continue to hold in its ranges, as investors await domestic data due next week. The MXN is weaker against the dollar as the pace of growth in Mexico’s manufacturing sector declined in January, breaking a three-month expansion streak. Mexico’s manufacturing PMI data dipped to 55.0 in January from a record-high of 57.1 in December as new export orders fell for the first time in more than a year. Market participants forecasts Mexico’s growth to slow this year to around 3.5% from an expected 4% expansion in 2012, as overseas demand for manufactured goods decline.