The US dollar strengthened against a basket of currencies, but weakened against the Japanese yen after modest US private job-losses. Data from ADP Employer Services showed employers cut 298,000 private sector jobs in August, shy of the 250,000 job losses analysts had forecasted, but better than the 360,000 jobs lost in July. Data from outplacement consultancy Challenger, Gray & Christmas, Inc indicated layoffs at US firms fell 21% in August, which stoked hopes for improved consumer spending. Data from the Labor Department showed non-farm productivity rose at a 6.6% annual rate, better than the 6.4% pace reported in July.
As world stocks fell, the euro weakened against the dollar. To further add salt to the wound, the euro further weakened after private sector job losses data from the US. The European Union statistics office Eurostat confirmed the Q2 gross domestic product of the 16 countries using the euro fell 0.1%.
The British pound fell to a near 6-week low overnight against the dollar, and hit its lowest since mid-July for the third straight day against the yen. The pound came under pressure vs. most major currencies as falling equity markets raised risk aversion, and on lingering concerns over the health of UK’s economy.
The Japanese yen touched a seven-week high against the dollar after the worse than expected US private sector jobs, which boosted safe-haven demand for the yen. The yen and dollar tend to rise when risk aversion becomes a strong sentiment amongst investors.
The Canadian dollar remains mostly steady against the US dollar after touching a two-week low vs. the greenback on softer equities. The steadiness of the loonie against the greenback is also supported by steady oil prices.
The Australian and New Zealand dollars initially hit an overnight high against the US dollar after data from Australia showed the local economy grew at its fastest pace in over a year. However, some of those gains were erased this morning as risk-averse investors sold off their riskier assets after US private sector job losses.
The Mexican peso sank to a seven-week low against the dollar after data from the US was worse than expected. The US is Mexico’s top trading partner, and with disappointing data hopes for a quick recovery in the US were undermined.
