Friday July 6, 2007 - 20:52:39 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar slips as payrolls rally runs out of steam
FOREX-Dollar slips as payrolls rally runs out of steam
Fri Jul 6, 2007 1:04 PM ET
(Recasts, adds comment)
By David McMahon
NEW YORK, July 6 (Reuters) - The dollar fell against the euro on Friday after an unexpectedly strong U.S. jobs report failed to change a view that U.S. interest rates this year will stay on hold while overseas rates rise, hurting the greenback.
The dollar initially rallied after the report, but quickly gave up its gains, hitting a 30-year low against the Canadian dollar and approaching a record low against the euro. A large U.S. bank and a central bank stepped in to buy euros, snuffing out a fleeting dollar rally after the data, traders said.
The government's non-farm payrolls report, the most closely watched barometer of the health of the U.S. labor market, showed that 132,000 jobs were created in June, beating the consensus forecast of 120,000 in a Reuters poll.
The dollar rose for a fourth straight session against the yen. But it fared worse against European currencies as the jobs data merely confirmed a view that the Federal Reserve will keep interest rates on hold at 5.25 percent this year, in contrast to the euro zone and Britain, where further monetary tightening is in store.
"Interest rate trends for Europe and the U.K. still favor the euro, and to some extent the pound compared to the dollar, considering the Fed's steady-rate stance," wrote Nick Bennenbroek, currency strategist at Wells Fargo in New York.
The euro was up 0.2 percent on the day at $1.3624, a little more than half a cent below a record high hit in April. Earlier in the session the euro had fallen as low as $1.3568 on electronic trading system EBS.
"There was some sovereign buying of euros when we dipped marginally lower to around 1.3575 and the market got caught on the wrong side," a trader with a European bank said.
The dollar was up 0.3 percent at 123.30 yen . Sterling was unchanged on the day at $2.0112 , around a cent below a 26-year peak hit earlier in the week.
Highlighting the dollar's shrinking yield advantage, even after the strong U.S. jobs report, 2-year U.S. Treasury bonds were yielding just 50 basis points more than euro-zone debt of the same maturity, close to the narrowest in 2-1/2 years.
The biggest winner on the day was the Canadian dollar, which surged to a 30-year high, supported by firm commodity prices and solid economic data, which has supported expectations that the Bank of Canada will raise interest rates next week.
The U.S. dollar was down 0.75 percent at C$1.0482 .
The yen continued to suffer across the board, hitting a record low against the euro for the second straight session as investors continued to sell the currency for high-yielding alternatives in so-called carry trades.
"The dollar had a bit of a rally but recent trends have been the carry trade and dollar weakness in general so it is creating a lot of buying opportunities for the euro and the pound," said Bernard Tsui, senior vice president and FX manager with Union Bank of California. (Additional reporting by Steven C. Johnson and Kevin Plumberg)
Â© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
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."