The greenback tumbled in U.S. session after release of a weaker-than-expected U.S. jobs report as market was preparing for a slightly improved non-farm payrolls number over the previous one.
U.S. non-farm payrolls slumped 85K jobs in December after a revised increase of 4K in the previous month amid expectations for a flat reading, while the annual rate of unemployment held steady at 10.0% for the second consecutive month. The breakdown of the report showed manufacturing jobs fell 27K after slipping 35K in November, with government payrolls tumbling 21K after rising 4K in the previous month, while the participation rate weakened to 64.6% during the month from 64.9%. The soft jobs data is highly expected to force the Fed to keep the rate unchanged in the next FOMC.
The U.S. dollar swiftly tumbled across the board after the dismal data, although profit-taking helped the buck to stage a minor rebound near European closing, another wave of renewed selling pushed dollar lower again, the U.S. Dollar Index closed lower by -0.455% at 77.46.
Versus the yen, the greenback extended its recent rally to a fresh 4-month high of 93.78 in Australia but price retreated after Japan's PM Hatayama told reporters that stable forex is desirable. The pair nose-dived after the release of weaker-than-expected non-farm payroll and hit an intra-day low of 92.27 before staging a brief rebound in NY mid-session.
The single currency fell in Europe on worse-than-expected Eurozone unemployment rate which rose to a high of 10.9% (vs. forecast of 9.9%) and price hit intra-day low of 1.4364 just before U.S. jobs data. However, euro quickly rebounded strongly after the release of NFP. Despite a brief pullback to 1.4301, price rallied higher in New York afternoon session and reached intra-day high of 1.4440 on broad-based USD selloff.
Despite a brief dip to 1.5915 in Asia, cable showed apparent strength throughout the day due to weekend short-covering and price rose to intra-day high of 1.6112 after NFP. Although pound had a strong pullback to 1.5957 in NY mid-session, price managed to close the day up. In other news, U.K. December PPI data came out better than expected (core PPI rose by 0.7% m/m vs. expected 0.1%)
Data to be released next week include Swiss retail sales, Canada housing starts on Monday, Japan trade balance, U.K. trade balance Canada trade balance, U.S. trade balance on Tuesday, Japan Machine tools orders, Australia Westpac consumer confidence, Germany GDP, U.K. industrial production, manufacturing production, EU industrial production, U.S. Fed budget on Wednesday, Japan domestic CGPI, machine orders, Australia unemployment rate, Germany HICP final, EU ECB rate decision, U.S. Import price index, jobless claims, retail sales on Thursday, Swiss combined PPI, EU HICP final, trade balance, U.S. CPI, capacity utilisation, industrial production on Friday. Monday is a market holiday in Japan.