A weak non-farm payrolls reading rocked the US dollar and re-kindled talk of a QE3 announcement next week. The euro was the top performer and the buck lagged. The weekly CFTC positioning data showed a shift into CAD as it hit the highest levels of the year. More of Ashrafs take on Fridays jobs figures is found below.
Payrolls rose 96K in August, lower than the 96K expected. Details of the report were soft with average weekly hours and earnings missing expectations.
The US dollar immediately slumped and continued lower. USD/JPY dropped nearly a full cent to 78.02. EUR/USD took off and eventually closed above 1.28. The euro now eyes the 200-day moving average of 1.2841.
A survey of economists from Reuters now sees a 60% chance of QE3 next week but we continue to believe that inflation worries and the potential for unintended consequences will keep Bernanke on the sidelines.
The euro, pound, Canadian dollar and gold all hit the highest levels of the summer. CAD was boosted by a solid employment report that saw 34K jobs compared to the 10K expected.
Weekly CFTC data was relatively unmoved but showed that CAD is now the favourite of the speculative community, surpassing AUD. Expect to see larger changes next week when Fridays moves are taken into account.
EUR -102K vs -101K
JPY +24K vs +22K
GBP 7K vs +2K
AUD +62K vs +78K
CAD +67K vs +61K
NZD +11K vs +14K
CHF -13K vs -11K
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