Euro bulls choked as employment boosts dollar

British pound – The pound stretched one-third of a cent below and then above Thursday’s close at $1.6275 ahead of Friday’s crucial employment update in the U.S. It was driven to its session low following a further slide in home values as reported by the Halifax building society. Its February reading showed a decline of almost twice the predicted pace with prices falling by 0.9% between months. The three-month change versus a year ago was a dip of 2.8%. The report also predicted further 2011 slippage of 2%. On balance the report detracts from the need for tighter monetary policy, which is why the pound weakened. Beyond U.S. data the pound remains weaker at $1.6254.

Aussie dollar – The Aussie is feeling fairly much out of the limelight as the spotlight turns to the euro after Trichet expressed his intentions on Thursday. With no data to drive the unit overnight, the Aussie even failed to catch a ride on the coattails of surging stock markets, a symptom of rising demand for all things risky. The unit fell to $1.0118 ahead of the U.S. labor report and is set for a weekly loss. Late last year the RBA climbed on a fence to cast its gaze across the economy and ever since has been unable to climb down. At this week’s monetary policy meeting it suggested that policy was now on the mildly restrictive side. The Aussie later slipped post-employment data from the U.S to reach $1.0092 cents.

Japanese yen – Rising global equity prices are a sign that everything is bright and rosy in the investment community once again. Forget $102 per barrel crude oil and its impact on the economy, it simply goes with the territory and forget the Middle Eastern conflict. All is well, at least as far as the yen is concerned. It has lost out to the dollar overnight and looks set to lose ground on the week as it trades at ¥82.83 as risk aversion tapers off. The yen suffered further spiking lower to ¥83.07 for its weakest in 10 days.

Canadian dollar – This month the Canadians don’t get to steal the thunder ahead of the U.S. employment report. Typically both nations report on the same day, but this time around Ottawa is slacking and we’ll have to wait until next Friday to learn more on the process of recovery further North. The loonie weakened at the margin against a slightly firmer greenback ahead of the U.S. report and was trading earlier as low as $1.0256. The unit was stable following the employment report from the South today.

Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

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About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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