US Dollar To Suffer From Poor NFP Data?
There was a bit of a shock on Friday as the non-farm payroll data out of the US came out much worse than the markets expected. The expected figure of 235,000 never materialised and instead we saw that US employers only added an extra 214,000 new jobs in October. The fallout from this is that an early interest rate hike from the Federal Reserve appears to be on the back burner again and as such we could see a bit of weakness in the US Dollar, especially as it rose 1.7% in the last month.
Most other countries don’t appear to be too perturbed by this recent Dollar strength. Japan appears more than happy with the recent Yen weakness and reiterated that there was no limit to measures that the Bank of Japan could take to ease the pressures of deflation. Similarly, Australian Prime Minister Tony Abbott has commented on the Australian Dollar’s weakness against the US Dollar saying that “..the dollar at $1.05 did impose certain strains on our economy… the levels we’ve seen it at in recent months are probably more comfortable for more people.”
In the UK, Mark Carney is expected to announce cuts to the Bank of England’s 2015 growth forecasts this week. As forewarned, this is due to the precarious state of the Eurozone at the moment. Exports to the UK’s biggest trading partner have dropped 11% in the past year and it is this which is holding the UK’s economy back and stopping Carney from raising interest rates sooner rather than later.
It’s a relatively quiet day news-wise on the markets today as traders digest the NFP results with investor confidence out of the Eurozone and housing starts from Canada being the main standout results.