Dollar weak after jobs report
Sunday, 6 January 2008
NEW YORK, Jan 05 (AFP): The dollar fell yesterday as a disappointing US payrolls survey highlighted soft economic conditions that boosts the risk of recession and further rate cuts by the Federal Reserve.
At 2200 GMT, the euro edged higher to 1.4765 dollars from 1.4746 dollars in New York late yesterday .
The dollar fell to 108.63 yen from 109.30 yen late Thursday.
The data from the US Labor Department Friday showed that only 18,000 new jobs were created in December, well below the 70,000 rise expected by analysts.
Further bad news emerged with the news that the unemployment rate, taken from a separate survey of households, jumped to 5.0 per cent in December, the highest rate since November 2005 and higher than the 4.8 expected by economists.
The markets interpreted the data as increasing the likelihood that the Fed would continue to cut interest rates this year in order to avoid a recession.
Other data Friday helped stem the selling tide, helping the US currency to move off its lows.
The non-manufacturing Institute of Supply Management (ISM) index fell to 53.9 in December from 54.1 in the previous month and a sliver above the market consensus for 53.8.
While not as bad as the payrolls data, the ISM figure confirmed the theme of slowing growth in the services sector, the biggest part of the economy and the most vulnerable to the tighter credit conditions that have emerged.
"Coupled with the manufacturing and employment reports it strongly suggests that the economy could use some more help. So I think we can assume a rate cut is likely on January 30. A 50 basis point move would make sense as we really do need to get through neutral and start putting the pedal to the metal."
In late New York trade, the dollar stood at 1.1084 Swiss francs from 1.1110 yesterday.
The pound was at 1.9729 dollars after 1.9713.
At 2200 GMT, the euro edged higher to 1.4765 dollars from 1.4746 dollars in New York late yesterday .
The dollar fell to 108.63 yen from 109.30 yen late Thursday.
The data from the US Labor Department Friday showed that only 18,000 new jobs were created in December, well below the 70,000 rise expected by analysts.
Further bad news emerged with the news that the unemployment rate, taken from a separate survey of households, jumped to 5.0 per cent in December, the highest rate since November 2005 and higher than the 4.8 expected by economists.
The markets interpreted the data as increasing the likelihood that the Fed would continue to cut interest rates this year in order to avoid a recession.
Other data Friday helped stem the selling tide, helping the US currency to move off its lows.
The non-manufacturing Institute of Supply Management (ISM) index fell to 53.9 in December from 54.1 in the previous month and a sliver above the market consensus for 53.8.
While not as bad as the payrolls data, the ISM figure confirmed the theme of slowing growth in the services sector, the biggest part of the economy and the most vulnerable to the tighter credit conditions that have emerged.
"Coupled with the manufacturing and employment reports it strongly suggests that the economy could use some more help. So I think we can assume a rate cut is likely on January 30. A 50 basis point move would make sense as we really do need to get through neutral and start putting the pedal to the metal."
In late New York trade, the dollar stood at 1.1084 Swiss francs from 1.1110 yesterday.
The pound was at 1.9729 dollars after 1.9713.