Monday, 5 September 2011

US Dollar Suffers From Terrible Nonfarm Payrolls

The U.S. dollar fell against other currencies, including the British pound and Japanese yen today after the non-farm payrolls showed that job creation in the U.S. stagnated. The currency also fell against the euro, but recovered later.

U.S. non-farm payrolls showed no growth in employment in August. That is far worse than market expectations (growth of 74 000) and the worst reading since September 2010, when employment fell by 95,000. Average hourly earnings fell 0.1 percent, while markets had an increase of 0.2 percent. The poor economic report renewed speculation the Federal Reserve needs third round of purchases of assets, known as quantitative easing to boost the economic recovery in the United States.

The index of the dollar managed to rise 0.3 percent, to 74,683 today from 74,479 yesterday. The dollar pared losses against the pound and the yen and rebounded against the euro. The Standard & Poor's 500 fell to 2.3 percent.

GBP/USD climbed from 1.6177 to 1.6253 before trading at 1.6220 as of 19:40 GMT today. USD/JPY fell from 76.91 to 76.80 and touched low of 76.52 intraday. Meanwhile, EUR/USD tumbled from 1.4257 to 1.4199.

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