Does the unempoyment rate support the USD on Friday?

After the USD has already received strong support from the data to the U.S. labor market yesterday, new and continuing jobless claims were below forecasts, it could get today another positive boost. At 08:30h (GMT -5) the current data of U.S. unemployment will be published. Apart from the fact that any reduction in unemployment is seen as a positive signal for the economy, it is an important factor for the reduction of bond purchases by the Fed. If the publication is below the forecasted 7.5%, this could be regarded by investors as a signal that the Fed still restricts their purchases this year and continue to increase the value of the USD. After the pair EUR / USD in the last days had scrached of the mark to 1.3300 already, he could fall below the mark of 1.3200 then today. An important role is also the data on Non-Farm Payrolls. Currently the EUR/USD-rate is 1.3220.

The FED-Comments slow down the USD

A dollar rally across the board followed news that  US added  200 000 new jobs in the private sector in July. Last quarter’s economic growth was also stronger than expected, topping economists’ expectations.  Gross Domestic Product (GDP) grew 1,7 %% annual rate. 1 %% was forecasted.  The rally quickly terminated on FED’s statement that the economy continues to recover, but still needs further support giving no indication when to terminate monetary easing. 

The published data marked the third straight quarter of GDP growth below 2 %%;  a pace normally, too, soft to bring unemployment down.  Growth is, however, expected to grow faster in the second half of 2013 as the fiscal burden brought on by Washington belt-tightening eases.

Investors first reactions on the data seemed to indicate that they increased the likelihood for an early autumn tapering. Traders betted initially on a stronger dollar and the green back rose across the board. Euro/USD fell to 1.3218 to bounce back at 1.3278.  USD/JPY is also initially stronger at 92,29.  Oil and precious metals prices posted immediate losses on the predictions of a stronger dollar. Brent crude fell below USD 106 a barrel and Gold to 1317.

This turned on FED’s latest statement which keep investors guessing. An end to monetary easing would have weakened the stock markets which have been given strong capital injections due to the bond buying program. Instead the data and FEDs no commitment boosted US stock markets as indexes inside the Euro area ended in red. GBP/USD fell to 1.5133 following the data after trading above 1.53 for the last days

Chinese authorities, mindful of the risk of a sharp economic slowdown that could derail their reform efforts, sent their clearest signal yet that they will do what it takes safeguard growth. China’s  main planning agency followed Tuesday up on the Politburo assurances, stating  that this year’s growth goal of 7, 5 %%  was safe.   Authorities would if necessary supply markets with ample funding.  The official growth  target represents  already a 23-year low.

Fed keeps their course, USD reacts negatively

The Fed announced today after their meeting that the current course with the purchase of 85 billion dollars will be maintained monthly. The Fed justified its action with continuing low Infaltion in the U.S., which is already for a year under the Fed's target level of 2%. Also, the continued high unemployment rate of 7.6% is considered as a basis for imploring for further action approach.

The USD reacted in the first minutes after the publication initially positive, but has now dropped considerably. the pair EUR / USD is currently trading at 1.3303, an increase of 0.30%. Even the GBP and the JPY could benefit from the message.

Waiting for the FED, USD edges up from 5 week low

The dollar edged higher on expectations US Federal Reserve (FED) based on better economic data will start tapering monetary easing in September or later in the autumn. Central bank meetings are due in the United States, England and European Central Bank (ECB) later in the week. No big changes are expected, but a FED policy decision pointing towards a termination in bond buying  will probably put upward pressure on the interest rates and strengthen the dollar.  

The dollar gained both against EURO, 1.3254, and Japanese yen which paid 98,06 yen to a dollar. The  DXY-index where dollar is weighed towards a basket of six major currencies was up 0,3 %% from a five week low.  Oil prices, and precious metals, gold and silver lost ground on a stronger dollar. The Swedish krone lost one percent on the Minister of Finance’s announcement of weaknesses in the generally perceived strong Scandinavian economy.

The US banking giant JP Morgan Chase which lately has been under regulators sharp scrutiny, settled on a USD 410 million on alleged power market manipulations in California and Midwestern states. The settlement involved that JPM admitted the facts presented by the Federal Energy Regulator without denying or admitting the facts. Banks involvement in the commodity chain by trading metals and at the same time owing warehouses and pipeline/plants have latest this week been under increasing fire from Congress. The disputed practice was initiated in 2003.

Global stock markets have lost some of its momentum starting a new trading week.  Both Dow Jones and S&P ended in red following a selloff in telecoms and materials after disappoint quarterly results from Verizon and Mosaic.