The greenback dropped initially against major currencies on Friday after a government report showed the U.S. unexpectedly lost jobs for a second consecutive month in February, however, investors took profits on recent short-dollar positions ahead of the weekend and on Fed liquidity move
A report showed the U.S. unexpectedly lost 63,000 jobs in February (expectation was an increase of 25,000 jobs), after a drop of 22,000 in January although the U.S. unemployment improved to 4.8% (forecast was 5.0%) in February from 4.9% in January,
Interest-rate futures showed a 96% chance the Fed will lower its target rate to 2.25% on March 18 from 3 percent. In early New York trading, traders had started to bet the cut would be as large as a full percentage point. However, the U.S. currency rebounded multi-year lows against euro, Japanese yen and Swiss franc as the Fed said it would increase amounts in its Term Auction Facility auctions on March 10 and March 24 to $50 billion each, a rise of $20 billion from the amounts announced for each of these auctions, leading traders to trim bets on a cut of as much as a full percentage point at the central bank's March 18 meeting,
The single currency rose to a fresh record high of 1.5465 versus the dollar after the weak U.S. jobs data and then retreated strongly to 1.5313 on profit-taking together with rumors that investors and major U.S. investment banks sold euros to protect options-related positions at the $1.55 level, Earlier in the day, European Central Bank President Jean-Claude Trichet said he supports the U.S. government's strong-dollar policy.
The greenback rebounded strongly from 8-year low of 101.40 to 103.25 on positions adjustment and renewed cross selling in jpy especially versus the euro and sterling. The British pound rose from 2.0082 to 2.0217 before paring some gains in tandem with euro.
Next week will see Japan’s machine orders, economic watch, German trade balance and current account, U.K. industrial, manufacturing production and PPI, U.S. wholesale inventories on Monday; U.K. BRC retail sales, and RICS house prices, German WPI, U.K. DCLG house prices, German and eurozone ZEW respectively and U.S. trade balance on Tuesday; Japan’s trade balance, domestic CGPI, GDP annualized and consumer confidence, U.K. trade balance, eurozone industrial production and U.S. Fed budget on Wednesday; Japan’s industrial production, U.S. retail sales, jobless claims and business inventories on Thursday; German CPI and final HICP, eurozone HICP, U.S. CPI and University of Michigan survey on Friday.