Friday November 7, 2008 - 10:12:51 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar slips on higher shares, U.S. jobs awaited
* Dollar slides before U.S. payrolls data
* Euro <EUR=> up 1 pct at $1.2820
* Economists expect 200,000 U.S. job losses in October
(Recasts, changes dateline prvs TOKYO)
By Naomi Tajitsu
LONDON, Nov 7 (Reuters) - The dollar slipped on Friday as
early gains in European shares tempted some investors to sell
the U.S. currency for higher-yielding ones, while markets
awaited an important reading of U.S. unemployment.
Investors also tried to determine the mid-term currency
impact of big interest rate cuts the previous day, when the Bank
of England cut rates by a staggering 1.5 percentage points,
while the European Central Bank eased by a half point.
U.S. payrolls figures due at 1330 GMT are expected to show
200,000 non-farm jobs were shed in October, which would be the
biggest drop in more than five years [nN05288837].
"The jobs data is a crucial reading and the market will
probably not like it much, so there's some selling ahead of the
announcement," said Geoffrey Yu, currency strategist at UBS in
Analysts said a weak reading would likely trigger initial
selling in the dollar as it would add to the view that the U.S.
economy is rapidly deteriorating, but added the U.S. currency
may ultimately gain on the argument that a struggling economy
may pose greater risks to the global economy.
"If we see a really bad jobs number, we could see another
round of risk reduction once again," said Yu at UBS.
Before the payrolls report, markets awaited a reading of
German industrial output due at 1100 GMT. Output is seen falling
by a monthly 2.0 percent in September, reversing a 3.4 percent
month-on-month rise in August.
The euro <EUR=> rallied around one percent to a session high
of $1.2850 according to Reuters data, recovering from a slide to
$1.2654 earlier in the day. The dollar <JPY=> fell 0.4 percent
to 97.38 yen.
Firm European shares also supported the euro, as they
signalled an easing of intense risk aversion that has battered
risky assets, including higher-yielding currencies such as the
euro and sterling.
The single currency had slipped on Thursday in an initial
reaction to the ECB's 50 basis point rate cut to 3.25 percent,
which had disappointed investors who had argued that a
struggling euro zone economy warranted a bigger reduction.
In contrast, the BoE's surprise 150 basis point cut, which
took rates to their lowest in 50 years to 3.0 percent, was seen
as a decisive move to help spur the ailing UK economy.
This helped to boost sterling <GBP=> by 0.8 percent versus
the dollar on Friday, although a slide against the euro
<EURGBP=> pushed the pound's value against a basket of major
currencies <=GBP> to its weakest in 12 years.
Some analysts said while sterling may receive some initial
support from the BoE's aggressive move, extreme economic
weakness would continue to weigh, and the euro would also stay
under selling pressure from the gloomy economic outlook for the
"With possibly six months of very weak economic data to come
from all the major developed economies, it seems premature to us
to believe that currencies will strengthen on the back of
monetary easing," analysts at BTM UFJ said in a research note.
(Editing by Mike Peacock)
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."