Dollar boosted off payroll gains

British pound – The pound rallied off its weakest in at least two weeks after cost pressures facing manufacturers stepped up last month. The pound earlier reached $1.6355 against the dollar but rebounded to a session high at $1.6437 after producer price input costs jumped by a greater than expected 2.6% during the month leaving the measure higher by 17.6% over a year ago. Output costs rose 0.8% in April for an annual pace of change of 5.3%, while the dumbed-down core reading of output costs rose 0.6% on the month for a 3.4% annual gain. The pound equally rose per euro to 88.44 pence.

Canadian dollar – Dealers remained cautious towards the loonie ahead of the U.S. employment report. Immediately after Statistics Canada reported a heady April gain for employment of 58,300 jobs investors drove the Canadian unit sharply higher to buy $1.0397 U.S. cents from $1.0298 in the run-up to the report. The government said the economy has now added 282,000 jobs in the space of a year while full-time positions have now surpassed the October 2008 level for the first time.

Aussie dollar – The Reserve bank released its quarterly monetary statement on Friday ramping up its inflation forecast for 2011 to 3.25% compared to its February projection of 3%. It maintained its growth estimate at 4.25%. The central bank signaled a need to raise interest rates at some point if it was going to meet its inflation-fighting objective that challenges it to maintain consumer prices between a 2-3% band. The Australian dollar reversed a portion of Thursday’s weakness against the dollar adding two cents from the day’s low at $1.0537. The Aussie remains bid, but at $1.0677 ahead of the U.S. employment report is off the session peak at $1.0734. The AiG construction performance index eased further during April to read 37.9.

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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