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Dollar down before employment data releases

Fri, Oct 3 2008, 11:12 GMT
by Benny Menashe

Finotec Group Inc.

The dollar weakened on Friday against a basket of major currencies ahead of important data releases in the States. A government report is expected to show that the current financial crisis has helped create the highest unemployment in over five years. Despite the approval of the $700 billion bailout package by the U.S Senate, there is still uncertainty as to whether the House of Representatives will reach the same decision. Sentiment is growing that the U.S economy will continue to suffer, despite the rescue plan being approved. The House is set to convene later today to vote on the matter. At 8.55am GMT, EUR/USD was trading at 1.3856.

In London sterling was relatively unchanged against the euro before a report out today showing that services in the U.K probably contracted for the fifth month in a row, increasing speculation that the British economy may already be in recession. The pound hit a three week low against the greenback yesterday on the back of data showing house prices fell to their lowest levels since 1991. Investors will be awaiting next week’s BoE interest rate decision where a quarter point cut is expected in an attempt to revive a struggling economy. ``We've been pretty negative on the U.K. economy for a while and we think we're not just in for one or two quarters of negative growth, stated, a senior currency strategist at Standard Chartered in London. At 8.55am GMT, GBP/USD was trading at 1.7686

Today the key data is Stateside. U.S Nonfarm payrolls and the unemployment rate will be released at 12:30 GMT. Analysts are predicting that employers slashed 105,000 jobs last month and that the rate of unemployment was held at a five year high of 6.1%. This data is likely to reinforce a negative view of the American economy and we could see pressure on the dollar. Eyes will also be on the the vote in the House of Representatives later today to see whether the $700 billion bank bailout will be passed.

Today's Economic Events

Published on  Fri, Oct 3 2008, 11:15 GMT