The disappointing U.S. employment numbers released last week continue to move markets. Asia currencies, including the yen, were off to a head start for the week as the dollar dipped on the lower than expected numbers.
U.S. nonfarm payrolls rose by only 38,000 in May, a far cry from the 162,000 expected, fueling new fears about the economy's health and casting doubts on a possible interest rate hike by the U.S. Federal Reserve in June or July.
According to Robert Rennie, global head of foreign-exchange strategy at Westpac Bank, "It does look like in the second quarter we've seen a sequential slowdown in U.S. growth. That closes June, that probably closes July."
Asian currencies climbed against the dollar, with the greenback fetching as few as 106.35 yen early Monday, down from levels over 109 yen on Friday. Among other currencies, the dollar fell to as low as 1.3559 Singapore dollars from as much as S$1.3773 before the data Friday. The Australian dollar rose, fetching as much as $0.7391, compared with as little as $0.7214 before the release.
Rally May Not be Sustainable
Some analysts are doubtful that the Asian currency rally is maintainable. Vishnu Varathan, an analyst at Mizuho Bank, believes that "Enduring gains in emerging market/Asia assets look like a long shot at this juncture.” According to Varathan, “The jobs data provided more uncertainty over global economic prospects, and that will likely erode confidence in the region.”
Other economists maintain the dollar will regain its strength. Kenneth Akintewe, senior investment manager at Aberdeen Asset Management told reporters that he expects the dollar to turn around in the next few days, “…. possibly this week. “ He believes that "There is the possibility will try and keep a near-term move on the table for the mere fact that later in the year we have the U.S. presidential elections which may make it difficult to do anything around that time."
Fed Chair Janet Yellen will be speaking later Monday and markets are on alert to what she will say.