During light Asian trading session, the U.S. Dollar struck a 1-month trough against the Japanese Yen as market players reevaluate the Federal Reserve’s likely next move on Quantitative Easing in the wake of last Friday’s disappointing labor report. On Friday, the U.S. Labor Department reported that new jobs increased by only 74,000, far fewer than analysts’ expectations of an increase of 200,000 and the fewest new hires for the month of December in almost three years. As a result and given the Fed’s mandate off full employment, expectations of an interest rate increase are now being pushed back until late 2015.
As reported at 11:17 a.m. (JST) in Tokyo, the USD/JPY pair traded at a session low of 103.26 Yen before crawling higher to 103.48 Yen, still a loss of 0.6%; on Friday, the pair hit a trough of 103.83 Yen just after the data release. The EUR/JPY fell to 141.50 Yen, a loss of 0.5%, after earlier hitting a 1-month low. The U.S. Dollar Index continued Friday’s slide and was trading at 80.525 .DXY, a decline of 0.2% from Friday’s 0.4% loss.
Bullish Sentiment Eroding
Analysts agree that the labor report was a negative surprise that sparked the momentum change in sentiment for the greenback which, until then, they say had been too bullish. The report was exactly what was needed to trigger a correction which resulted in the Dollar’s broad pull back, though despite the news, ultimately the market still views the U.S. economic recovery as on track.