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Dollar surges and Euro sinks after U.S. jobs data announcement

By Agence France-Presse
Saturday, July 7, 2012 4:26 EDT
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The dollar surged and the euro sank again Friday after US labor data for June showed the economy was not pumping out the jobs needed to bring down the high unemployment rate.

The data told investors that the United States was as stuck in low-growth mode as the rest of the world but also raised hopes that the government and Federal Reserve would add efforts to boost the economy.

The euro lost more than a cent, falling to $1.2287 compared to $1.2391, the euro’s lowest level against the dollar since July 1, 2010.

The US Labor Department reported Friday that the US netted only 80,000 fresh jobs last month and 75,000 per month on average in the second quarter — far short of what is needed just to keep up with the growth of the labor market.

The numbers echoed other data indicating that already feeble growth was decelerating in the second quarter.

“US data will now be in sharp focus over the next month, as further declines in indicators would surely build the case” for new stimulus measures from the Fed, said ETX Capital trader Ishaq Siddiqi.

The euro had already tumbled sharply Thursday after three central banks — the People’s Bank of China, the European Central Bank, and the Bank of England — took action to help their respective economies, but only served to underscore the economic weakness worldwide.

Traders thought the ECB’s actions did not go far enough to address the eurozone’s ills.

“It may be that the markets think non-conventional monetary policy is becoming increasingly ineffective and that the problem of a ‘liquidity trap’ has not been resolved,” said economist Neil MacKinnon at VTB Capital.

The yen continued to strengthen, after IMF chief Christine Lagarde acknowledged in Tokyo early Friday that the currency was “moderately overvalued”.

Prime Minister Yoshihiko Noda had complained to Lagarde that Japan’s economy was “suffering a serious, adverse impact” over the currency’s strength.

The euro traded to 97.83 yen late Friday compared to 99.00 yen, and the dollar at 79.62 yen from 79.88 yen Thursday.

The British pound fell again against the dollar, to $1.5485 from $1.5525. The dollar bought 0.9771 Swiss francs, compared to 0.9692 francs a day earlier.

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
 
 
 
 
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