The dollar unexpectedly fell after weaker than expected U.S. employment data early last week which maintained expectations that the Federal Reserve will be taking a steady approach in tapering its bond purchasing programme this year. U.S. employers hired just a scant of the required number of workers in nearly three years during the last quarter of last year. The only set-back was it was likely to be only temporary albeit signs that cold weather might have an effect thereafter.
The nonfarm payrolls increased only as much as 74,000 last month which was regarded as the smallest increase in the past three years and the unemployment rate likewise fell 0.3 % according to data released by the labour Department last week. The unemployment rate was at its lowest in the past six years and in part it reflected people having left with no choice but to forcibly leave the labour force.
It was a clear disappointing figure and the markets are reflecting such disappointment by selling the dollar across the board. The U.S. central bank announced last year that it would be lessening its monthly purchases of bonds and many economists are expecting it to decide on the same-sized cut of bonds in the next session scheduled by the end of this month.
The U.S. Treasury yields which moves inversely proportional to the price fell while stocks in general traded slightly lower. Meanwhile, the demand for Eurozone government bonds has kept the euro from a distance against the dollar. The key principle at the beginning of the outlooks on monetary policy; from which the pound and dollar have acquired both characteristics, benefited at the cost of the euro.
The ECB chairman added that the pressure on the Euro last week by beefing up the bank’s guarantee to take more action to lower market borrowing costs should the circumstance necessitate.
While the Eurozone economy still looks relatively weak, government finances as well as banking in the zone appear far healthier than it did a few months back and players are beginning to trade much more on the improvement in its debt-laded southern half.
There is definitely a very strong restructuring on the price of the euro and people likewise want to be a part of the very strong performance provided by the southern part of Europe.
Recent data showed that the French economy is perceived to be very fragile in the currency bloc which only grew 0.5 % in the 4th quarter while the Spanish industrial output was far better in terms of performance.
Finally, the euro was traded down by 0.3 % against the yen at 142.24 yen with the dollar being traded a bit higher as compared to the euro prior to the employment data.