Nonfarm Payroll Data Weak, But Dollar Buttresed by Weakness in Other Currencies
Daily Forex Fundamentals |
Written by CMS Forex |
Sep 05 08 23:10 GMT |
Nonfarm Payroll Data Weak, But Dollar Buttresed by Weakness in Other Currencies
JPN Capital Spending Down 6.5% in 2nd Quarter
In Japan, capital spending took another sharp tumble in the 2nd quarter falling 6.5%, far below expectations of a small increase. Weaker demand from home and abroad combined with record energy and material costs reduced the willingness of companies to spend. The data factors into GDP, and will likely cause 2nd quarter GDP to be revised down from its preliminary estimate of -0.6%.
AUD/JPY - Aussie Slides to 2-Year Low vs Yen
The Yen strengthened against the Aussie last night as declines in US stocks prompted traders to sell higher-yielding assets financed with Japan's currency. The Aussie-Yen pair hit a 2-year low when it tested support near 85.00. That level was about 560 pips lower than yesterday's high. Commodity prices continued to decline as demand weakens with economies around the world slowing.
GER Industrial Production Down 1.8% in July
In Germany, industrial production undershot forecasts, falling 1.8% in July, increasing the pressure on the economy. Manufacturing orders declined for the 8th straight month, and the business climate remains weak, which will limit production in the coming months.
US Economy Sheds 84K in August
In the US, payrolls fell 84K in August, and July's figure was revised down to show the economy shedding 60K jobs. The unemployment rate jumped to 6.1%, which is the highest since September 2003.
EUR/USD - Euro Hits 11-Month Low Overnight
The Euro-Dollar pair breached 1.42 overnight following the weak German data. That's the lowest the pair has been in nearly one year. The weak US jobs report gave the Euro a boost, but those gains were short lived. For the week, the pair is down more than 400 pips.
USD/JPY - Dollar Falls to 105.50 Before Recovering
The Dollar-Yen pair fell further overnight and tested the 105.50 level after the nonfarm release. Equities in Europe and Asia fell overnight as investors fretted about the global economic outlook and positioned themselves to face index lows for the year. US stocks were lower in the Friday morning session, but staged a rebound, which helped the Dollar recover most of the losses it suffered earlier in the session against the Yen.
CAN Employment Grows by 15.2K in August
The Canadian economy added 15,200 jobs in August, a rebound from last month's sharp decline of 55K. The unemployment rate stayed at 6.1%, when expectations had it rising.
CAN Ivey PMI Falls to 51.5 in August
The Ivey PMI grew at a tepid pace in August, as the index fell from 65.5 to 51.5. It remains above the boom-bust level of 50, but is at its lowest point this year. A breakdown of the data showed that there was an improvement in employment while prices eased.
USD/CAD - Loonie Gains on Canadian Jobs Report
The US Dollar-Canadian Dollar pair fell in favor of the Loonie following the Canadian jobs report. The pair hit support at 1.06 and rose after the Ivey PMI. The pair has had a volatile week, especially after the decision by the Bank of Canada, but at the end of the week it traded close to where it started.
Next Week Upcoming Releases
Early next week the UK will post its producer prices, manufacturing production, and trade balance. The rest of the week includes retail sales data from the US, Australia, New Zealand and the UK.
