Job Reports from the States and Canada Show Employment Market Recession Deepening
Fundamental Archives |
Written by CMS Forex |
Dec 06 08 03:27 GMT |
Job Reports from the States and Canada Show Employment Market Recession Deepening
German Factory Orders Plunge
We begin with fundamental data today. In Germany, factory orders plunged 17.3% on the year in October and were down 6.1% on the month. Both figures were below economists' forecasts and illustrate the difficulty the Euro-zone's largest economy is facing following the intensification of the credit crisis. In September, monthly orders fell at the fastest pace in 18 years.
Grim NFP Employment Report
In the US, the monthly nonfarm jobs report was very grim. November saw the economy shedding 533,000 jobs, the sharpest in 34 years, and October's figure revised down by 80,000. The decline was worse than anticipated and signals that the US recession is deepening and may be more severe than the last two we had in the early 90's and in 2001. The unemployment rate increased to 6.7%, a 15-year high. The report will put pressure on the Fed when it meets on December 16th. Rates are already at 1%, and expectations will be for another 50 basis point cut, though the Fed may deem it necessary to cut rates even further bringing the US close to a zero interest rate policy.
EUR/USD - Euro Slides Following Poor Orders Data
The Euro-Dollar fell overnight as European stocks were lower and the German factory orders pressured the Euro. Following the US nonfarm data the pair saw some back and forth action with the pair keeping most of its overnight losses. This cut into yesterday' sharp Euro rally following the interest rate cut from the ECB. The Dollar's gains reflect increased risk aversion which has been boosting the Dollar during this financial crisis.
USD/JPY - Knee-jerk Reaction Following NFP Data
The Dollar-Yen pair had a more straight forward reaction, falling below yesterday's low near 92 to test the area near 91.60, a move of about 100 pips from its session high. US stocks fell at the open and the Dow Jones index was down more than 200 points in early morning trading. The Yen is the other currency that has been gaining during times of risk aversion.
GBP/USD - Sterling Remains in Down-sloping Range
The sense of risk aversion pushed the Pound-Dollar pair lower as well, continuing a downward channel we have seen this week. The pair came up to its line of resistance near 1.47, and was turned back following the non-farm release.
Canadian Employment Loses Ground
The Canadian economy meanwhile shed 70,600 jobs in November, almost three times the number of lost jobs predicted by economists. Losses were split pretty evenly between full and part time work though Ontario's manufacturing sector led the overall decline. The unemployment rate inched up to 6.3%.
USD/CAD - Loonie Loses After Higher-than-Expected Job Loss Data
The US Dollar-Canadian Dollar pair was climbing in favor of the greenback prior to the release, and continued surging afterwards. The 220 pip rally brought the pair to 1.30, a key level of resistance that has stopped the previous two greenback rallies in late October and late November. The Loonie is feeling the pressure as the country's political scene is mired in uncertainty and oil prices continue to decline on global recession fears. For the week, the greenback is up nearly 600 pips.
Next Week's Releases
Next week starts with producer prices from the UK, and industrial production data from Germany. On Tuesday, the UK will post its manufacturing data, the Euro-zone releases measures of investor confidence and the Bank of Canada will decide on interest rates.
