Market Review - 03/07/2014 22:50GMT
The greenback strengthens broadly on upbeat U.S. jobs data
Dollar rallied against its major peers on Friday as the release of upbeat U.S. employment reports boosted demand for the greenback. The single currency dropped broadly as dovish remarks from ECB's President Mario Draghi during the speech in ECB's post rate decision press conference weighed on euro.
Versus the Japanese yen, dollar strengthened after finding support at 101.76 in Australia on Thursday and price edged higher to 101.94 in Asia and then 101.96 in European morning. Later, release of upbeat U.S. jobs reports triggered broad-based buying in greenback and the pair surged above 102.00 level to a high of 102.27 in New York morning. However, gain was limited as industry data released later in the day showed service sector activity in the U.S. grew at a slower rate than expected in June, dampening optimism over the economic outlook.
U.S. non-farm payrolls rose by 288K last month, surpassing expectations for an increase of 212K. The previous month's figure was revised up to a gain of 224K fm a previously reported increase of 217K. Meanwhile, the unemployment rate ticked down to a 4-1/2 year low of 6.1% fm 6.3% in May. In a separate report, U.S. initial jobless claims rose by 2K to a seasonally adjusted 315K for the week ended June 28. Later, a report from the Institute of Supply Management showed its non-manufacturing purchasing manager's index fell to 56.0 last month from a reading of 56.3 in May.
The single currency traded with a soft undertone and hovered above Wednesday's New York low of 1.3643 in Asia and Europe sessions. Later, release of strong U.S. payrolls report and dovish remarks from ECB's President Mario Draghi in ECB's post rate decision press conference pressured price sharply lower to 1.3596 in New York morning before recovering.
The ECB left all rates on hold 0.15% on Thursday, in a widely anticipated decision, after cutting rates to record lows in June. In the prost-rate decision meeting press conference, ECB President Mario Draghi reiterated the bank’s forward guidance that rates will remain on hold at present or lower levels for an extended period. He emphasized that 'the governing council is also unanimous in its commitment to use unconventional instruments' if necessary, to address the risk of too-prolonged period of low inflation.' Draghi said unemployment rate in the euro zone is still too high and warned that risks to the economy remain to the downside He also announced that it will shift to a six-week meeting cycle from January 2015 and that it will start publishing meeting minutes.
Cable weakened in Asia on Thursday and retreated to 1.7034 in European morning after data showed that activity in the U.K. service sector slowed more than expected in June, but activity remained robust with new business growth and payrolls increasing. Later, the British pound briefly selloff to 1.7092 (Reuters only) versus the dollar in New York due to release of upbeat U.S. payroll data before renewed cross-buying in sterling lifted price to 1.7156.
The Markit U.K. services purchasing managers' index slowed to 57.7 in June from 58.6 in May, and below forecasts of 58.3. It was the lowest reading in three months, but activity remained robust with new business growth and payrolls increasing.
In other news, RBA Governor Glenn Stevens said on Thursday, 'rebalancing signs encouraging but some way to go yet; monetary policy very accommodative, but still has ammunition on rates;
A$ overvalued by most measures, and by more than a few cents; investors under-estimating risk of sharp fall in A$ at some point; not seeking to actively "jawbone" the currency lower; has not contemplated tightening, stability language has worked on market expectations; could drop reference to stable rates long before giving any thought to tightening; federal budget unlikely to change near term economic outlook; longer term tightening of fiscal policy seems sensible; questions whether budget impact on household confidence will persist; Q1 GDP probably overstated pace of growth, outlook little below trend; housing market appears to be calming down, slower price growth favoured; conditions in housing market do not warrant higher rates.
Data to be released on Friday:
Germany industrial orders, U.K. Halifax house prices. U.S. independence day holiday.
The greenback strengthens broadly on upbeat U.S. jobs data
Dollar rallied against its major peers on Friday as the release of upbeat U.S. employment reports boosted demand for the greenback. The single currency dropped broadly as dovish remarks from ECB's President Mario Draghi during the speech in ECB's post rate decision press conference weighed on euro.
Versus the Japanese yen, dollar strengthened after finding support at 101.76 in Australia on Thursday and price edged higher to 101.94 in Asia and then 101.96 in European morning. Later, release of upbeat U.S. jobs reports triggered broad-based buying in greenback and the pair surged above 102.00 level to a high of 102.27 in New York morning. However, gain was limited as industry data released later in the day showed service sector activity in the U.S. grew at a slower rate than expected in June, dampening optimism over the economic outlook.
U.S. non-farm payrolls rose by 288K last month, surpassing expectations for an increase of 212K. The previous month's figure was revised up to a gain of 224K fm a previously reported increase of 217K. Meanwhile, the unemployment rate ticked down to a 4-1/2 year low of 6.1% fm 6.3% in May. In a separate report, U.S. initial jobless claims rose by 2K to a seasonally adjusted 315K for the week ended June 28. Later, a report from the Institute of Supply Management showed its non-manufacturing purchasing manager's index fell to 56.0 last month from a reading of 56.3 in May.
The single currency traded with a soft undertone and hovered above Wednesday's New York low of 1.3643 in Asia and Europe sessions. Later, release of strong U.S. payrolls report and dovish remarks from ECB's President Mario Draghi in ECB's post rate decision press conference pressured price sharply lower to 1.3596 in New York morning before recovering.
The ECB left all rates on hold 0.15% on Thursday, in a widely anticipated decision, after cutting rates to record lows in June. In the prost-rate decision meeting press conference, ECB President Mario Draghi reiterated the bank’s forward guidance that rates will remain on hold at present or lower levels for an extended period. He emphasized that 'the governing council is also unanimous in its commitment to use unconventional instruments' if necessary, to address the risk of too-prolonged period of low inflation.' Draghi said unemployment rate in the euro zone is still too high and warned that risks to the economy remain to the downside He also announced that it will shift to a six-week meeting cycle from January 2015 and that it will start publishing meeting minutes.
Cable weakened in Asia on Thursday and retreated to 1.7034 in European morning after data showed that activity in the U.K. service sector slowed more than expected in June, but activity remained robust with new business growth and payrolls increasing. Later, the British pound briefly selloff to 1.7092 (Reuters only) versus the dollar in New York due to release of upbeat U.S. payroll data before renewed cross-buying in sterling lifted price to 1.7156.
The Markit U.K. services purchasing managers' index slowed to 57.7 in June from 58.6 in May, and below forecasts of 58.3. It was the lowest reading in three months, but activity remained robust with new business growth and payrolls increasing.
In other news, RBA Governor Glenn Stevens said on Thursday, 'rebalancing signs encouraging but some way to go yet; monetary policy very accommodative, but still has ammunition on rates;
A$ overvalued by most measures, and by more than a few cents; investors under-estimating risk of sharp fall in A$ at some point; not seeking to actively "jawbone" the currency lower; has not contemplated tightening, stability language has worked on market expectations; could drop reference to stable rates long before giving any thought to tightening; federal budget unlikely to change near term economic outlook; longer term tightening of fiscal policy seems sensible; questions whether budget impact on household confidence will persist; Q1 GDP probably overstated pace of growth, outlook little below trend; housing market appears to be calming down, slower price growth favoured; conditions in housing market do not warrant higher rates.
Data to be released on Friday:
Germany industrial orders, U.K. Halifax house prices. U.S. independence day holiday.
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