Market Commentary and Intraday News

Dollar Mixed Following September Jobs Report

230 days ago

(RTTNews) - The dollar is currently trading mixed on Friday, but overall little changed, following the better than expected jobs report for September. The surprise drop in the U.S. unemployment rate and the continued growth in employment overshadowed news out of Spain, which has made claims that it does not require a bailout.

With employment in the U.S. rising for the twenty-fourth consecutive month in September, the Labor Department released a report on Friday showing that the unemployment rate for the month fell to its lowest level in well over three years.

The report showed that employment increased by 114,000 jobs in September following an upwardly revised increase of 142,000 jobs in August. Economists had expected employment to increase by 113,000 jobs compared to the addition of 96,000 jobs originally reported for the previous month.

The continued job growth pushed the unemployment rate down to 7.8 percent in September from 8.1 percent in August. The drop surprised economists, who had expected the unemployment rate to come in unchanged.

Spanish Economy Minister Luis de Guindos on Thursday insisted that his country does not need a bailout, despite rumors that the troubled euro member may request European aid as soon as this weekend.

"Spain does not need a bailout at all," he said in a speech in London. De Guindos' speech was interrupted several times by a group of audience holding up a banner saying "Spain for sale."

The minister's remarks came a couple of days after Prime Minister Mariyano Rajoy denied reports that Spain is planning to seek a bailout at the upcoming meeting of Eurozone finance ministers on October 8.

The French economy will stagnate in the second half of this year, extending the period of stagnation to five consecutive quarters, reports said citing the latest forecasts from statistical office Insee, published Thursday.

The statistical office also forecasts the Eurozone economy to have entered recession in the third quarter with the gross domestic product falling 0.2 percent quarter-on-quarter following a 0.2 percent contraction in the second quarter. Recession is expected to continue in the fourth quarter with GDP falling 0.1 percent.

Insee predicts the French economy to grow just 0.2 percent in 2012, below the government's forecast for a 0.3 percent expansion.

The dollar has fallen below a range around the $1.3015 level versus the Euro on Friday, to over a 2-week low of $1.3070.

Germany's factory orders declined more than expected in August on weak domestic orders, suggesting that the economy gained only limited support from private consumption. Orders fell 1.3 percent from a month ago, when it rose 0.3 percent, the Federal Ministry of Economics and Technology reported Friday. Bookings were forecast to decline by 0.5 percent.

The buck has rebounded from a low of $1.6216 versus the pound sterling, to around $1.6180.

The Bank of Japan abstained from announcing more stimulus on Friday after lifting its asset purchase by JPY 10 trillion last month despite mounting political pressure and further weakening of economic activity.

The policy board led by Governor Masaaki Shirakawa, retained the benchmark overnight uncollateralized call rate at 0-0.1 percent. The board also decided to maintain the size of the asset purchase and credit facility at JPY 55 trillion and JPY 25 trillion respectively.

The greenback rebounded from an early low of Y78.264 versus the Japanese Yen, to around Y78.685.

Japan's leading index improved in August after easing for four consecutive months, preliminary data from the Cabinet Office showed Friday. The leading economic index, which is designed to measure the direction of the economy in the months ahead, rose to 93.6 in August from 93 in July. The index was forecast to rise to 93.5.

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