The Dollar tumbled to an eight-month low against the Yen and dropped versus the Euro after data showed the U.S lost twice as many jobs in July as expected, fueling concerns that the Federal Reserve may need to take additional steps towards providing extra stimulus measures. On Friday the U.S Labor Department reported that Non-Farm payrolls fell by 131K, compared with an expected drop of 63K. While the private sector (excluding government agencies) rose by 71K, below market expectations of a 91K rise. Meanwhile, the unemployment rate dropped from 9.6% to 9.5%.
Canada’s dollar was the worst performer among the majors last week after the disappointing payroll report. At the same time, Canada unemployment rate increased from 7.9% to 8.0% after the country unexpectedly lost jobs in July. The Canadian currency fell 1% to C$1.0268, following the report. Meanwhile, the Australia Dollar was up against that of the U.S for a third consecutive week. The Aussie touched $0.9222 following the U.S employment report, the currency’s highest price since early May.
The Euro surged against the Dollar on Friday, hitting $1.3332 after a weaker-than-expected Non-Farm Payroll report. The pair finished the week at the highest level since early May, barely below $1.3300.
Tomorrow, the Federal Reserve will announce its benchmark interest rate decision. Analysts predict that the FOMC will hold the key interest rate at its current range of 0 to 0.25%. As usual, the Dollar will be heavily affected by Bernanke’s speech. Increased signs that the economy may be slowing down, may push the Fed to declare a new program for buying assets or renew its committee to low short-term policy rates, moves that could weigh heavily on the value of the Dollar.
The Sterling hit a six-month high near $1.60 on Friday, its fourth consecutive weekly gain against the Dollar, propelled by the U.S’s disappointing job report and increased confidence in the U.K economy. The GBP/USD rose 0.6% to $1.5993 following the report, the pair’s highest price since February 3rd. The British currency gained more than 1.9% last week. On Thursday, the Bank of England Monetary Policy Committee left target for bond holdings at 200 billion pounds and held the overnight interest rate at 0.5%.
Written by Finexo.com