After US unemployment figures and rate were released, the US dollar see-sawed vs. most major currencies. The Labor Department indicated employers cut 216,000 jobs in August, the smallest since August 2008, but the unemployment rate rose to a 26-year high of 9.7%. Many analysts had expected non-farm payrolls to drop by 225,000 in August and unemployment rate to rise to 9.5%. In other news, the Group of 20 has promised to keep economic support packages in places until recovery is certain and will withdraw the stimulus when it is appropriate.
Overnight, the euro rallied against the dollar, but erased most of those gains after the US jobs report for August were released. The dollar also benefited against the euro after Trichet’s dovish statement this morning. After yesterday’s ECB rate announcement to keep their overnight rates at a record low of 1%, ECB President Jean-Claude Trichet said this morning the central bank could raise interest rates before fully withdrawing extra liquidity, if justified by market tensions.
The British pound remains steady vs. the dollar after the US jobs report for August. The pound’s steadiness can also be attributed to British construction Q2 output volume falling by 0.5% which is a vast improvement from the estimated 2.2% decline, prompting speculation about a possible upward revision to GDP in the quarter.
The Japanese yen fell broadly against the dollar as the safe-haven allure of the yen dimmed. Japanese companies’ capital expenditure declined 21.7% in Q2 vs. a record fall of 25.1% in Q1.
The Canadian dollar rallied against the US dollar after jobs were added in Canada. Statsitics Canada reported 27,100 jobs were created compared to the 10,000 losses forecasted by analysts.
The Australian and New Zealand dollar held its ground vs. the US dollar before and after the US unemployment data. As investors’ appetite for risk rebound and commodities do well, currencies such as the Aussie and the kiwi strengthen against the greenback.
The Mexican peso slipped against the US dollar after data showed the US unemployment rate was higher than expected. Mexico has been counting on the US economy to rebound, which in turn would help pull their economy out of the deepest recession since the 1930s.
