Japanese yen – The dollar’s solid advance also has it beating back the yen, where currency pressure on exporters is beginning to buckle. The dollar accelerated in early New York trading as stock index futures responded to losses across European bourses. The dollar rose to ¥77.82 and is increasingly seen as the best safe haven alternative as risks from the further quantitative easing are seen as limited to shaking down the Fed’s balance sheet and after the Swiss capped the franc’s upside by implementing a peg.
British pound – Sterling still has some way to go before taking out its July low versus the dollar, yet remains below $1.6000 for a fourth day. On Thursday the Bank of England neglected to make any changes to monetary policy, which seemed to provide a sense of relief that created undue optimism for the pound, or at least a short-covering rally. The pound rose on Thursday to a session high at $1.6050 and as we head in to the weekend the unit slumped to a session low at $1.5901.
Aussie dollar – The Aussie dollar’s performance pretty well sums up the ongoing risks to global growth on Friday as it heads back towards the lowest point of the week. It was the rebound in equity prices earlier that drove the unit to as high as $1.0650 U.S. cents along with a cleverly worded speech from central bank Governor Stevens who said that it was nice that he had flexibility in monetary policy when investor confidence swooned repeatedly. His remarks essentially said that the bank doesn’t have to raise rates, but he sounded some way off being persuaded that policy needs to be eased. This week’s employment report also disappointed investors with the net number of jobs falling for a second month as the rate of unemployment rose to 5.3%. The Aussie hit free-fall mode on Friday as risk appetite soured sending the unit down to $1.0509.
Canadian dollar – A surprise jump in the headline unemployment rate sent the Canadian unit back towards its weekly low. Expectations of a net gain in employment were dashed by a slide in part-time employment where 31,200 workers lost their positions. Full-time employment gained in-line with expectations. The headline rate ticked up to 7.3% while the participation rate slipped by a smidgeon to 66.7%. The government said most jobs were lost in the construction sector (-24,000) while transportation and warehousing shed 14,000 positions. The loss of 12,000 positions across the natural resource sector means that the sector has fewer employees than one year ago. The loonie eased to buy $1.0050 U.S. at the session low.
Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC
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