Friday December 5, 2008 - 10:39:50 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar little changed, traders await US jobs data
* Dollar little changed, market awaits U.S. jobs report
* Euro holds gains after big ECB interest rate cut
* Weak jobs reading may spur risk aversion, boosting dollar
(Changes byline, dateline, adds comment, updates throughout;
By Naomi Tajitsu
LONDON, Dec 5 (Reuters) - The dollar was little changed
against the euro and the yen on Friday, as investors awaited
U.S. jobs data which is expected to show that the U.S. economy
is deteriorating further and may need more interest rate cuts.
The euro held slight gains made the previous day, when the
European Central Bank delivered its biggest interest rate cut
ever, slicing 75 basis points off its key lending rate to 2.75
percent to support its economy in the face of a global
Traders awaited U.S. non-farm payrolls for November, which
are forecast to show a loss of 340,000 jobs. Such a reading
would mark the biggest monthly drop in more than two decades.
Analysts said that speculation was growing that the figure
could be even worse, and currencies were likely to take a cue
from how equity markets react to the announcement at 1330 GMT.
"Markets are prepared for quite a big negative number," said
Ian Stannard, senior foreign exchange strategist at BNP Paribas
A big negative figure would add to the view that the U.S.
economy is slowing down sharply, warranting a weaker dollar. But
he pointed out that indications that the global recession is
deepening could heighten risk aversion and possibly boost the
"If we do see equity markets coming off sharply and it turns
into a global equity markets sell off, then we could well see
currencies coming back under pressure against the dollar, so it
could actually be a dollar-positive."
At 0841 GMT, the euro was little changed at $1.2760, after
inching up to a session high of $1.2795 early in the London
Against a basket of currencies, .DXY, the U.S. currency
was flat at 86.632, while hovering around 92.18 yen, roughly 0.2
percent lower on the day.
The dollar and the yen have benefited from risk aversion as
an increasingly grim global economic outlook has battered stock
markets and other asset classes.
This has prompted investors to dump risky positions
including those in what were once high-yielding currencies such
as the euro, sterling and the Australian and New Zealand
dollars, in favour of the U.S. currency and the low-yielding
Sterling <GBP=> rose 0.4 percent to $1.4730 as some traders
covered short positions in the currency after it plumbed a near
seven-year low against the dollar on Thursday, when the Bank of
England cut rates by 100 basis points to 2.0 percent.
The move took UK rates to their lowest level since 1951,
while the BoE indicated more needed to be done to prevent a
credit squeeze tipping Britain's economy into a prolonged
This kept overall sentiment weak for the pound, which
hovered near a record low against the euro <EURGBP=>. Market
participants expect the belief that the UK economy will continue
to weaken to keep the pound under selling pressure.
Even after Thursday's big rate cuts, market participants
believe that the interest rates of major countries around the
world have more room to fall.
This would shrink their spreads against the Federal
Reserve's 1.0 percent rate and Japan's 0.3 percent, which are
seen keeping the dollar and the yen supported in the longer
Analysts said that trade was quiet early on Friday before
the U.S. jobs report, in addition to uncertainty over the fate
of troubled U.S. automakers and their attempts to secure
The chief executives of General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) and
Chrysler LLC said they would consider restarting merger talks if
needed to win their slice of up to $34 billion in emergency U.S.
government aid. [ID:nN04392913]
The CEOs will appear again before the U.S. House Financial
Services Committee on Friday.
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."