Market Review – 04/02/2011 19:49 GMT
Dollar rallies broadly on surprised sharp fall in U.S. unemployment rate
The greenback rallied versus the Japanese yen on Friday as U.S. Treasury yields jumped after the key U.S. jobs report showed U.S. unemployment rate fell sharply in January to 9.0% versus previous month’s rate of 9.4%, this was the lowest level since April 2009, painting a brighter picture for the U.S. economy.
Although the pair dropped briefly below Tuesday’s 81.31 low to 81.10 immediately after the mixed U.S. jobs report, dollar swiftly rebounded n price later rallied to as high as 82.47 b4 stabilizing in late NY session. The benchmark U.S. 10-year treasury yields rose 11 basis points at 3.655% n 30-year treasury yields went up to a high of 4.74%. Eur/jpy, aud/jpy, gbp/jpy also rallied fm 110.77 to 112.06, 82.61 to 83.51 n 130.83 to 132.75 respectively.
Euro traded steadily after Thursday’s selloff fm 1.3826 before key U.S. employment report in Asia on Friday. Although euro jumped to 1.3680 immediately after the much-awaited U.S. Jan jobs report showed nonfarm payrolls added only 36,000 jobs versus forecast of 108,000 due to the cold bad weather, traders quickly sold the single currency when they saw unemployment rate fell sharply from previous 9.4% to 9.0%, euro tanked to 1.3577 and eventually ratcheted lower to an intra-day low of 1.3543 b4 stabilizing.
The British pound moved sideways in Asia n briefly rose to an intra-day high of 1.6173 after stronger-than-expected U.K. house prices data. U.K. house prices unexpectedly rose by 0.8% (forecast was no change) in Jan. but fell by 2.4% (forecast was -3.0%) in the three months to Jan. compared with a year ago. Halifax economist Martin Ellis expected limited movement in house prices overall this year but said there are likely to be some monthly fluctuations with the risk on the downside. Later, despite cable’s initial rebound to 1.6152 after the release of mixed U.S. jobs data, the pound also tumbled to 1.6036 in tandem with the single currency b4 recovering in NY mid-day.
Data to be released next week:
Australia retail sales, Japan leading indicator, Germany factory order, Canada building permit on Monday
Japan current account, economic watch DI, Swiss unemployment rate, Canada housing starts on Tuesday
Japan consumer confidence, Germany export/import data n trade balance, U.K. trade balance on Wednesday
Japan domestic CGPI, machine order, Swiss CPI, U.K. industrial production, manufacturing production, BoE rate decision, Canada new housing price, U.S. jobless claims, wholesales inventories, Fed budget on Thursday
Friday will be a holiday in Japan. Germany CPI, U.K PPI, U.S. trade balance n University of Michigan consumer confidence survey, Canada trade balance n export/import data on Friday.