Daily Forex Analysis by Finexo.com 11/01/2010


The US Non-Farm Payroll report came out on Thursday amidst a wealth of hope that it would show the US employment situation improving drastically, a hope brought on by two indicators earlier in the week. However, the data showed a much larger than expected drop, 11,000 more than expected, and raised the number of US unemployed since the recession began to 7.4 million or 10.14% of the population. Upon the report’s release, the Dollar collapsed, falling the most in one session in around two months. The Dollar had been traded up earlier in the week after the ADP payroll report and the First-Time-Filers unemployment report showed improvement, however all the gains were quickly wiped out as investors were betting on a strong NFP report. The report is especially damaging since it is now unlikely that the US Federal Reserve will move to raise their near low interest rates at their next policy meeting in February. Investors had hoped that a spate of positive data would spur the rate hike, however with the jobs situation seemingly still in decline; there is little optimism this will occur.

At the close, the US Dollar was down .12% against the Euro to 1.44 even, down 1.01% against the British Pound Sterling to 1.602, down .86% versus the Canadian Dollar to 1.0301, down .72% to the Australian Dollar to .9245, down .92% against the New Zealand Dollar to .7358 and down over 1% to the Swiss Franc to 1.023.

The ICE Dollar Futures Index, a non-traded indicator that matches the Dollar’s performance against a basket of 6 major currencies, fell by its largest margin in two months, hitting just below 77 before recovering to close at 77.02.

Japan’s new Finance Minister, Naoto Kan, who came to his position last week after the surprise resignation of Hirohisa Fujii, recanted his inaugural pledge to “work hard to tame the strength of the Yen.” The remark was meant to establish himself as a pragmatic financial leader amidst concerns that he was not qualified for the post – echoing trader, businessmen and market sentiment that the Yen’s recent bull run was a concern. However, on Friday Mr., Kan was quoted as saying that free markets should dictate the value of the currency, a capitulating statement that is widely seen as necessary to placate the Prime Minister who was reportedly not pleased with Kan’s earlier remarks.

At the close, the Yen was up .03% to the Euro to 133.42, up .56% to the US Dollar to 92.65, up .34% to the British Pound Sterling to 148.43, up .12% against the Australian Dollar to 85.65 and down .08% versus the Swiss Franc to 90.52.

Written by Finexo.com