The highlight of the week was U.S. dollar’s fall against most major currencies, after data on much lower than anticipated job numbers, raising serious doubts about the pace of recovery in the world’s largest economy. Data from the Bureau of Labour Statistics indicated that job growth slowed dramatically in December 2013, thus questioning the Federal Reserve’s decision to cut its bond-buying programme. The weak job growth triggered a slide in U.S. treasuries and strengthened the case for the Fed to keep interest rates low for a longer period of time.
The much-anticipated non-farm payroll reportshowed that only 74,000 jobs were created in December, well below expectations for the creation of 194,000 new jobs and much below the upwardly revised November figure of 241,000. It is noteworthy that this number marks the lowest employment monthly upsurge within the last three years. In addition, the Ministry of Labour reported an increase in the number of applications for unemployment benefits from 15,000 to 330,000 in the first week of January 2014. The report also indicated that the unemployment rate dropped from 7% in November to 6.7%, although this decline was due to weak participation rate caused by arctic weather conditions prevailing in December.
TeleTrade analysts said “Forex traders had been awaiting a strong dollar in anticipation of a positive US jobs figure, after the healthy employment preliminary report released from ADP”. The negative figures came as a shock to the financial market consensus, expecting an increase of 194,000 in the number of people employed in December. Economists also estimated the unemployment rate to remain unchanged at around 7%.
U.S. dollar weak against most rivals
In the wake of disappointing U.S. job numbers on January 10th, 2014, most currencies gained ground on the greenback, with the euro gaining 0.5% to $1.3686 rising to more than one week high, while the yen climbed 0.7% to Y104.05, touching the strongest in three weeks. Australian dollar touched a one-month high of up to $0.9038against the U.S. dollar, after home-loan approvals exceeded expectations and climbed 1.1% from the previous month.
Before the release of the non-farm payroll report, the dollar had started to strengthen, along with the Fed’s announcement on December, 18, that it would begin its tapering of stimulus with a $10 bn-a-month reduction in its $85bn monthly purchase of bonds. At the time of the announcement of the report, the U.S. dollar index, which tracks the performance of the currency versus a basket of six other major currencies, fell 0.5% from 81.01 to 80.59.
In much interest of traders, emerging market currencies will beamong the biggest beneficiaries of the possible maintenance of the current pace of tapering, having previously been under pressure, as investors took funds away from themto the recovering developed economies. After the release of the data, the South African Rand gained 0.6% against the dollar, the Brazilian Real a 1%, the Philippine Peso a 1.7% and the Indonesian Rupiah edged up more than 2%.
Earlier on Monday, January 13th, the greenback still traded low against major currencies, though it narrowed its losses, as traders avoided the currency after the employment report disappointed the markets and fuelled expectations for the Fed to take its time in scaling back stimulus.
In the week ahead, January 14 – 17, Forex traders will need to closely monitor U.S. data on retail sales, inflation and consumer spending, which account for the majority of the overall economic activity, as well as import prices, business inventories and speeches by two Federal Reserve’s officials. US retail sales may indicate sharp fall in consumer demand, and if so, it may delay even more the stimulus reduction process by the Fed.
About TeleTrade– Financial Markets Expert
Founded in 1994, TeleTrade is a truly global brand with over 200 offices in 30 countries, being an acknowledged leader in its field with numerous industry and business awards.TeleTrade-DJ International Consulting Ltd is established in Cyprus and maintains representative offices in most EU countries. It is licensed and regulated by CySec (Cyprus Securities and Exchange Commission) under licence number 158/11 and operates in accordance with MiFID (EU Investment Directive).
Dear Clients, In accordance with our risk management procedures and due to increased volatility, please be informed that the Company will be increasing margin requirements for a number of...
Dear TeleTrade Clients, Please view the following changes to trading sessions of the below CFD instruments on July 3, 2020 due to USA Independence Day. Changes to trading...
Dear TeleTrade Customers, In accordance with our risk management procedures, we will be increasing the margin requirements from for CFD on YNDX (Yandex NV) from 10% to 40%. The changes will be...
Dear TeleTrade Customers, Please note there will be changes in the trading hours on CFD instruments on June 1, 2020, due to Whit Monday. Changes in trading sessions on CFD...
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2020 TeleTrade-DJ International Consulting Ltd
TeleTrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. TeleTrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
TeleTrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.