Commodity-linked currencies saw an upswing in momentum and held onto earlier gains as the Euro and the U.S. Dollar fell out of favor with investors. Friday’s release of the eagerly awaited U.S. labor report missed expectations of a solid rise in the data, with only 192,000 new jobs reported in March, missing the consensus estimate of 199,000 new positions. Though FX traders were disappointed in the numbers, analysts in retrospect say that it still points to solid job growth for a month which saw harsh weather conditions in the U.S., suggesting that weather-related effects are likely to be over.
As reported at 10:56 a.m. (JST) in Tokyo, the U.S. Dollar Index fell from a 7-week high on the news, trading at 80.436 .DXY from 80.599 .DXY. The USD/JPY edged away from a 2½ month peak, dropping to 103.36 Yen from 104.13 Yen. The Dollar, in fact, fell broadly against commodity-linked currencies, dipping slightly against the Euro but more substantially against the Canadian, New Zealand and Australian Dollars. The EUR/USD traded at $1.3697, close to a 5-week low of $1.3672.
Traders Consider ECB Easing Possibility
The Euro is likely to continue to be under pressure as investors ponder the latest media report which said that the ECB had already thought through the repercussions of easing. Given that, investors will be considering the possibility that the European central Bank could soon begin its own quantitative easing in order to shore up the Eurozone’s economy and prevent further slippage into deflation.