The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3585 level and was capped around the $1.3750 level. Data released in the U.S. today saw December non-farm payrolls off 524,000, the worst print in more than fifteen years, while the unemployment rate moved higher-than-expected to 7.2%, the highest level since January 1993. Also, October's and November's prints were negatively revised a cumulative 154,000 jobs. Today's data mean 2.6 million jobs were shed in the U.S. economy in 2008 - the most since 1945 - with 1.9 million jobs lost in the four months alone. The marginally attached component of the jobs picture that measures underemployed and disenfranchised workers suggests the actual jobless rate in the U.S. could be above 12.5%. Also, December hourly earnings were up 3.7% y/y and average hours worked declined to 33.3, a new cyclical low. The average hours worked data are typically a leading economic indicator and these data suggest companies may be reducing employment rolls further in coming months. Boston Federal Reserve President Rosengren last night reported the U.S. recession is deeper and more severe than originally thought. Rosengren added It appears the economy contracted quite significantly in the final quarter of 2008 and may continue contracting over at least the first half of 2009. We are seeing businesses retrenching and unemployment rising. Kansas City Federal President Hoenig hawkishly said the Fed must have a plan to withdraw the hundreds of billions of dollars of monetary stimulus it has injected by expanding its balance sheet. The Fed's balance sheet has ballooned from about US$ 800 billion last year to $2.1 trillion at the present time. In eurozone news, German November industrial output was reported off 3.1% m/m and down 6.4% y/y. European Central Bank President Trichet reported the ECB is considering ways to enhance its supervisory role in the banking sector. Other data released today saw EMU-15 November retail sales climb 0.6% m/m and fall 1.5% y/y. Traders await December retail sales data to see if final private demand improved during the holiday shopping period. It was also reported that the eurozone future inflation gauge fell to a 3.5 year low. Euro bids are cited around the US$ 1.3055 level.
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.55 level and was capped around the ¥91.55 level. Japanese financial markets will be closed on Monday and less yen liquidity in the market could render it easier for dealers to push the yen higher or lower. Data released in Japan today saw the November coincident index off 2.8 index points m/m. Also, Japanese reported US$ 1.031 trillion of foreign reserves at the end of last month. The Nikkei 225 stock index lost 0.45% to close at ¥8,836.80. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥123.95 level and was capped around the ¥125.25 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥139.30 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.80 level. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8360 in the over-the-counter market, up from CNY 6.8352. Data released in China overnight saw Q4 business confidence plunge to an eight-year low at 94.6.
The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5345 level and was supported around the US$ 1.5110 level. Traders are talking about media reports that a deal could be in the works between Bank of England and the U.K. Treasury to conduct quantitative easing. Chancellor Darling this week suggested quantitative easing is not yet in the works and any quantitative easing would require cooperation between the central bank and Treasury. It is likely that Darling's position will soften and the central bank will begin to monetize assets on its balance sheet. Data released in the U.K. today saw November factory output fall at its fastest annual pace since 1981, off 7.4% y/y. Production was off 2.9% in November, considerably worse than expectations. These data will likely have a negative impact on preliminary gross domestic product data for Q4 that are scheduled to be release on 23 January. Other data saw December producer price inflation unchanged m/m and up 4.7% y/y, the weakest level since December 2007. December input prices fell 2.0% and the annual rate fell to +4.3%, the weakest level since August 2007. Cable bids are cited around the US$ 1.3920 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8920 level and was capped around the ₤0.9040 level.
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1045 level and was supported around the CHF 1.0885 level. Swiss National Bank is expected to maintain an easy monetary policy for the next several months. U.S. dollar offers are cited around the CHF 1.1330 level. The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.5020 level while the British pound gained ground vis-à-vis the Swiss franc as sterling tested offers around the CHF 1.6805 level.
The Australian dollar came off vis-à-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.7010 level and was capped around the $0.7120 level. Economic data that were released in Australia this week were quite low and many traders believe Reserve Bank of Australia will continue to ease interest rates in Q1. Australian dollar bids are cited around the US$ 0.6600 figure.
The Canadian dollar depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the C$ 1.1930 level and was supported around the C$ 1.1790 level. Data released in Canada today saw December payrolls decline 34,400 with the unemployment rate rising to 6.6% from 6.3% in November. Average hourly wage growth fell to +4.5% y/y in December. Finance minister Flaherty reported Canada will run a substantial budget deficit in the fiscal year starting on 1 April. U.S. dollar offers are cited around the C$ 1.2210 level.