The US dollar took losses against several of its main currency rivals on Friday, following the release of this month’s Non-Farm Payrolls report and unemployment rate. An unexpected drop in the US unemployment rate raised confidence in the American economic recovery, which in turn boosted demand for higher-yielding assets. This week, traders will want to pay attention to several key news events out of the euro-zone and US. A speech from the ECB President on Tuesday, the US trade balance report on Thursday followed by US consumer sentiment data on Friday all have the potential to create market volatility.
Economic News
USD – Dollar Sees Mixed Reaction to Unemployment Figure
An unexpected drop in the US unemployment rate led to risk taking among investors on Friday, which resulted in the safe-haven USD taking losses against its higher-yielding currency rivals. Against the Canadian dollar, the greenback fell close to 75 pips after the news was released, eventually trading as low as 0.9734 before staging an upward correction. The USD/CAD finished the week at 0.9785. The dollar had more look against its safe-haven rival the Japanese yen. The USD/JPY shot up more than 40 pips during mid-day trading, eventually reaching as high as 78.86. The pair closed out the week at 78.65.
This week, several economic indicators out of the US have the potential to create volatility for the dollar. Traders will want to pay attention to Thursday’s trade balance and unemployment claims figures, followed by Friday’s PPI and Prelim UoM Consumer Sentiment. During the first half of the week, euro-zone news, particularly with regards to the debt crisis in Spain, is likely to impact risk sentiment in the marketplace.
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