US dollar nears eight-week peak

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

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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