The US non-farm employment change was expected to nudge into positive territory this month, however a 95,000 drop in employment was revealed.
This surprise figure had an initial shock effect sending the dollar down to the day’s low of £0.6278 from £0.6305 against the pound and to a fresh fifteen year low against the yen below 82yen. However, since the data was published the greenback did stage a short recovery as investors sold their short dollar positions ahead of the long US weekend.
In other news, look out this weekend as the G7 and IMF meetings will no doubt be centred around the ‘currency wars’ that showing signs of breaking out between the higher yielding currencies, in particular the Brazilian real, in an attempt to keep their exports competitive on the world stage. Another hot topic will be the increasing discomfort bigger players in the currency market are feeling from the painfully slow appreciation of the Chinese yuan. You have to feel sorry for the German export market as the euro has increased in value by almost 10% in just one month making the relative price of Chinese exports that much cheaper by comparison.
Tom Hampton
Analyst - Caxton FX
