• Dollar slides after jobs data disappoints
• GBP soars to 6-week highs after U.S. jobs data is released
• German industrial orders jump, lending strength to the euro
USD – Disappointing non-farm payrolls data released today crushed the U.S. dollar, sending it lower against the major currencies and near 2-week lows versus the euro. The weaker-than-expected jobs data raised concerns that the pace of recovery in the American labor market has slowed down. The poor U.S. jobs report along with downbeat economic indicators in the manufacturing and service sectors earlier this week should ensure that the Federal Reserve's quantitative easing policy will be in place for some time. Labor Department data showed that the U.S. economy added only 88,000 non-farm jobs last month, well below the consensus forecasts for a gain of 190,000.
EUR – The single currency has stabilized this morning, holding well above yesterday’s 4½-month low of $1.2740, after data showed a bigger-than-expected jump in German industrial orders, adding to signs Europe's largest economy and growth engine is back on track after a dismal end to last year. Seasonally and price-adjusted order intakes rose 2.3 percent on the month, data from the Economy Ministry showed, well above a forecast for a 1.2 percent rise. It was the strongest rise since October, and made up for a 1.6 percent fall in January. The data was a further indication that Germany's robust domestic economy will likely compensate for weak demand this year from top trading partners in Europe, which are burdened with the debt crisis.
GBP – The pound was able to capitalize on today’s dollar negative news out of the U.S., rising to a 6-week high, as U.S. jobs data suggested fiscal tightening could be hampering an economic recovery. Analysts said sterling's climb was partly driven by positioning, as investors who had sold the pound in recent months on concerns about the British economy were squeezed out of those short positions. It is likely that the pound's gains will be limited by persistent worries that Britain could slip into its third recession in less than five years and by the risk of more monetary easing from the Bank of England later this year. Although sterling gained some support following better-than-expected UK services sector data on Thursday and Japanese investors looking for higher-yielding assets after the Bank of Japan announced aggressive easing measures, many analysts said the outlook remained clouded and it is likely that we will see 1.49 levels in the coming months.
JPY – Despite the weaker-than expected U.S. jobs data released today, the Japanese yen continued to weaken following the BoJ’s dramatic decision to move forward with radical monetary easing. Investors took profit after yesterday’s steep drop on the yen, sparked by the policy meeting, resulting in the biggest one-day fall in the currency since late 2008. Although market strategists believe the recent yen drop was excessive, that the currency could continue to weaken. Many are adjusting forecasts, with the possibility of 100 yen by month end, and 105-110 in the next 12 months.
Commodity Currencies – With the prospect of higher interest rates on the horizon, the New Zealand dollar is well supported with 5-year highs in its sights. A sustained break above current levels could push the kiwi as high as 88.10, the 2008 peak. Australia and New Zealand are particularly well-placed to benefit from yen carry trades as their AAA rated government bonds pay some of the highest yields in the developed world. The Canadian dollar weakened to a session low against its U.S. counterpart on Friday after both U.S. and Canadian employment data came in far weaker than expected.
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