The Dollar Gained On Job’s Reports | IFCM UAE
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The Dollar Gained On Job’s Reports - 5.9.2011

Stock markets were under pressure on Friday and in Asian trading hours today after US job reports reading on Friday that showed no workers were added in August and amid concern that the European sovereign debt crisis will worsen. Investors again switched to relatively safer assets, like gold and government bonds, pushing their prices higher. The yield of the 10-year US bonds tumbled by 14 basis points on September 2 to 1.99%, while gold climbed to 1884 dollars per ounce, approaching its all-time high at 1912 dollars. In foreign exchange markets traditional safe-heaven currencies gained ground: the US dollar, the Swiss franc and the Japanese yen all strengthened against their major counterparts. US Dollar The dollar advanced against the euro, the Canadian, Australian and New Zealand currencies, extending gains from last week that had come amid concern Europe’s sovereign debt crisis will worsen. The main world reserve currency was supported as the data revealed that US payrolls were unchanged in August, the weakest reading since September 2010, as employers became less confident about the strength of the recovery, and the jobless rate held at 9.1%. Tomorrow investors will be carefully watching non-manufacturing data from the USA. According to expectations, service industries probably expanded in August at the slowest pace in more than a year, adding to concern the recovery is losing steam, economists said before a report this week. The Institute for Supply Management’s non-manufacturing index fell to 51 last month, the lowest since January 2010, from 52.7 in July. The Dollar Index, which tracks the greenback against the currencies of six major US trade partners, rose on Friday to 74.76, the highest level since August 12. Euro The euro extended today its 5-day losses against the greenback, falling to 1.4135 in Asian trading hours from 1.4550 last Monday. The single currency was hit as well by the Friday’s suspension of talks between the Greek government and representatives of the International Monetary Fund, European Central Bank and European Commission over new bailout funds. The talks were suspended amid disagreements over how to fill a government-deficit gap that once again appears to be veering off track, the Wall Street Journal informed. European Central Bank President Jean-Claude Trichet is scheduled to speak in Paris today before the ECB’s policy meeting on September 8, when the central bank is expected to keep its benchmark interest rate unchanged at 1.5%. As for today we would underline the July retail sales report. Economists predict the euro-zone retail sales dropped by 1% from a year ago. Canadian Dollar The Canadian dollar fell on Friday against the greenback from the highest level in almost a month on concern the global economy may lapse into another recession, dimming the prospects for the nation’s exports of raw materials. Canada’s economy shrank by 0.4% in the second quarter following a 3.6% gain in the first three months of the year, according to the Statistics Department’s reports issued last week. It was the first quarterly contraction since the recession two years ago as a strong loonie boosted imports and curbed exports. As for the labor market, the economy added 24000 jobs in August after a 7100 increase in the previous month, according to estimations before a report on September 9. The unemployment rate is expected to hold at 7.2%. The Canadian dollar extended its losses against its US counterpart in Asian trading hours today as the pair USD/CAD rose to a week high – 0.9883.
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