The U.S. dollar was mostly flat against the majority of its counterparts overnight as market participants await this morning’s economic data. However, the greenback retreated versus the British pound, giving back all of its steep gains from the day prior. The Australian dollar rose for the fourth straight day against the U.S. dollar as higher Asian stocks boosted demand for the higher-yielding asset. This morning’s data showed that employers added more payrolls than forecast in September, job gains were revised up in the prior two months and hours and earnings increased, helping ease concerns the U.S. labor market is deteriorating. Payrolls climbed by 103K workers after a revised 57K increase in the prior month that was more than originally estimated, the Labor Department reported today. The jobless rate held steady at 9.1%. Faster job growth may be a sign employers remain confident the U.S. will avoid a renewed slump, even as unemployment is forecast to remain above 8.0% through 2013. U.S. equity futures shot higher following the data and has put the U.S. dollar under pressure across the board.
The Euro has gained modestly versus the U.S. dollar in early trading following better than expected U.S. jobs data. The euro is headed for a weekly gain against the U.S. dollar, snapping two weeks of losses, on speculation financial support for European banks will help stem the region’s debt crisis. The Euro gained yesterday after the European Central Bank said it will reintroduce yearlong loans and resume purchases of covered bonds to encourage lending. While the ECB took steps to bolster the region’s lenders, the European Commission is pushing for a coordinated capital injection into banks. German Chancellor Angela Merkel said policy makers “shouldn’t hesitate” if it turns out institutions are undercapitalized.
The Japanese yen once again was unchanged versus the U.S. dollar overnight. Meanwhile, Bank of Japan Governor Masaaki Shirakawa said the yen’s strengthening risks exacting “lasting damage” to the nation’s economy even as the central bank refrained from adding more monetary stimulus. Shirakawa and his policy board members kept the overnight lending rate between 0 and 0.1% in a unanimous decision at a meeting in Tokyo today. They also left credit and asset-buying purchases totaling 50 trillion yen unchanged.
The British pound strengthened the most in a week against the U.S. dollar amid optimism the Bank of England’s decision to reactivate its bond-purchases program will help revive the U.K.’s weakening economy. The pound initially fell yesterday after the announcement of further measures that included expanding the central bank’s quantitative easing program by 75 billion pounds. Governor Mervyn King said he was “confident” the measures would work. The currency was able to hold its gains even after Moody’s Investor Service downgraded 12 British financials institutions.
