Dollar falls broadly on long liquidation after mixed U.S. jobs report: Dec 5, 2016

Market Review - 03/12/2016   02:40GMT  

Dollar falls broadly on long liquidation after mixed U.S. jobs report

The greenback ended the day lower against majority of its peers on Friday as the release of mixed U.S. jobs report cast some doubts about the path the Federal Reserve will take next year regarding rate hikes, triggering broad-based long liquidation in the usd.  
  
The U.S. Labor Department said the economy added 178,000 jobs in November, beating expectations for an increase of 175,000. However, the number of jobs created in October was revised down to 142,000 from a previously estimated 161,000 gain.  
  
The unemployment rate fell to 4.6% in November from 4.9% the previous month, confounding expectations for an unchanged reading. Meanwhile, average hourly earnings slipped 0.1% this month, compared to expectations for a 0.2% rise and after an increase of 0.4% in October.  
  
Versus the Japanese yen, although the greenback rebounded to 114.14 at European open, then briefly to session high at 114.21 in volatile trading post release of U.S. jobs report, price dropped sharply to an intra-day low at 113.33 in New York morning before staging a minor recovery.  
  
The single currency traded with a firm bias in Asia and gained to session high at 1.0690, however, price pared its gains and tumbled to an intra-day low at 1.0625 at NY open. Later, euro found renewed buying there and rebounded strongly to 1.0676 in New York morning on dollar's broad-based weakness, price later climbed to 1.0680 before easing. Market awaits outcome of key Italian referendum on Sunday which will come during Asian morning on Monday where embattling PM Matteo Renzi seek support to change the constitution to make radical reforms and he he loses, he may resign and will worsen current banking crisis in Italy.  
  
The British pound traded with a firm bias in Asia and gained to 1.2649 at European open. Despite a brief pullback to 1.2593 in European morning, cable found renewed buying and rallied to 1.2689 in New York morning on dollar's weakness together with cross-buying of sterling vs euro, the pound later extended intra-day gain to a fresh 7-week high of 1.2738 near the close.  
  
In other news, BoE's Chief economist Haldane said 'comfortable with BoE's current neutral bias on direction of next rate move; BoE shud not proceed too hastily with tighter policy as rates near 0 lower bound; risks to BoE economic forecasts are evenly balanced to upside n downside; near-term impact of sterling weakness on growth n inflation likely to be significant; material chance UK growth cud underperform expectations next year due to squeeze on household spending; recent rise in UK inflation expectations benign n helpful, returns them to early 2015 lvl; further large, persistent, upward move in inflation expectations wud be less benign n possibly unhelpful.'  
  
Data to be released this week:  
  
Australia business inventories, China services PMI, Japan consumer confidence, Italy services PMI, France services PMI, Germany services PMI, EU services PMI, sentix index, retail sales, UK services PMI, U.S. services PMI and ISM non-manufacturing PMI on Monday.