By Joe Manimbo of Travelex
The dollar continued its slide against the euro and pound Friday after the U.S. government reported that nonfarm payrolls declined more than expected in June.
Yesterday, on the back of dismal U.S. housing, manufacturing and jobless claims data, the dollar had plummeted to fresh seven-month lows against the yen and a six-week trough vs. the euro. The dollar had then taken a breather ahead of the employment data.
Also of note was the fact that the
joined the dollar in falling on yesterday's bad news. Recall that the trend had been for the Dow to rise when the dollar fell and vice versa, as the dollar had achieved a sort of safe-haven status. Yesterday's action was contrary to that and more in line with what one would expect when local data disappoint.
The pound found itself trading at two-month peak this morning largely for the same reasons that the single currency rose yesterday. The Swiss franc found itself a bit lower this morning after playing the role of champion on Thursday. The pullback is largely attributable to traders positioning themselves ahead of the jobs report this morning and is not expected to have been a result of any intervention by the Swiss National Bank.
The other relatively big movers over night were the antipodean currencies, which regained some traction as traders paused ahead of this morning's data. The Aussie and Kiwi both fell on Thursday as the weak data forced investors to recalculate their risk tolerance.
: U.S. June nonfarm payrolls fell by 125,000. This was worse than the forecast for a decline of 110,000 jobs.
May was revised slightly higher (433,000 from 431,000), and April was revised higher (313,000 from 290,000).
The June unemployment rate fell from 9.7% to 9.5%, its lowest level since July 2009.
The unemployment rate will certainly provide headline fodder for politicians clamoring for statistics that paint an improving jobs picture, but the reality is that job seekers are giving up on actively seeking work and thus are not being included in the figure.
Private-sector payrolls grew by less that expected. Taken as a whole, the report paints a picture of continued weakness in the U.S. labor market. Markets are taking it that way as well, as the dollar has tumbled to new lows against the euro and the pound on the heels of the release.
: Some had suspected the Swiss National Bank of entering markets overnight as the Swiss franc tumbled almost 0.5% in a matter of minutes against the dollar on Friday morning.
This would be counter to the most recent SNB post meeting statement, though given that the Swiss franc's rise has continued briskly since the announcement two weeks ago. Other than speculation, there is no evidence that any intervention actually took place.