[B]Market Review - 09/03/2013 [I]03:03 GMT[/I] [/B]
[B]Dollar rallies broadly on upbeat U.S. jobs report[/B]
The dollar rose broadly against other major currencies on Friday as the upbeat U.S. jobs reports showed American jobs sector continued its rebound and suggested that the U.S. economy is finally on the mend after 4 years of stagnation.
Non-farm payrolls figure showed the U.S. added some 236K jobs for February, much better than market expectation of 160K, however, revisions from January’s figure painted a slightly less rosy picture with January jobs growth revised lower to 119K from 157K. U.S. unemployment fell to its lowest figures since 2008 to 7.7%, much better than street forecast of 7.9%.
In early trading, although the single currency found support at 1.3080 versus the dollar shortly after European opening and rose above Thursday’s high of 1.3119 to a fresh weekly high at 1.3135 ahead of the release of German industrial production, the data came in worse-than-expected and euro was under pressure in European midday, later, the upbeat U.S. jobs reports knocked price sharply lower in New York morning and euro dropped below Thursday’s low at 1.3165 to a fresh 2-1/2 month trough at 1.3155 before recovering to 1.3008 but only to tank to 1.2957 again as rating agency Fitch Ratings downgraded Italy’s sovereign rating to ‘BBB’ in New York afternoon.
Fitch Ratings has downgraded Italy’s long-term foreign and local currency Issuer Default Ratings (IDR) to ‘BBB’ from ‘A-’. The outlook on the long-term IDRs is negative. Fitch has simultaneously affirmed the short-term foreign currency IDR at ‘F2’ and the common eurozone Country Ceiling for Italy at ‘AAA’. Fitch Ratings said ‘Italy downgrade comes on inconclusive elections and ongoing recession; it could cut Italy further if recession is deeper and longer than forecast.’
German industrial production stagnated in January, as higher construction output offset falling activity in the manufacturing and energy sectors, official data showed Friday. Data showed that industrial output was unchanged in January compared with December, disappointing market expectations for a rise of around 0.4 percent. The previous month, output had expanded by 0.6 percent month-on-month.
In other European currency, despite cable’s early rebound from 1.4982 to 1.5047 in tandem with euro in European morning, the British pound tumbled against the dollar after the release of better-than-expected U.S. jobs reports and nose-dived to a fresh 2-1/2 year low at 1.4886 New York morning. Later, the pair staged a recovery to 1.4959 due to cross buying of sterling versus euro and then moved in a choppy fashion inside 1.4886-1.4959 range in New York afternoon.
Versus the Japanese yen, dollar traded with a firm undertone throughout Friday’s session due to active cross selling of yen versus other currencies and greenback’s broad-based firmness. The pair penetrated Thursday’s high at 95.10 in Asian morning and ratcheted higher to a fresh 3-1/2 year peak at 96.60 in New York but only to retreat to 95.50 in New York afternoon on cross-unwinding in yen.
Cabinet Office said on Friday that growth in Japan was flat in the October to December quarter from the previous quarter, revising up a preliminary figure of a 0.1 percent contraction and signalling an end to recession. On an annualised basis, Japan GDP grew a revised 0.2 percent in the quarter, showing the world’s third largest economy technically ended its latest recession.
In other commodity currency, the Canadian dollar strengthened against the usd on Friday as a similarly positive Canadian jobs report supported demand for the loonie. Official data earlier showed that the economy added 50,700 jobs last month, far more than the expected 8,000 rise, after the loss of 21,900 jobs in January. The pair usd/cad dropped after the data and fell to a one-week low of 1.0234 in New York morning before rebounding.
[B]Data to be released next week include : [/B]
Japan machinery orders and machine tools orders, German trade balance, import and export, Switzerland retail sales, and Italy GDP on Monday.
Japan domestic CGPI, tertiary industry index and consumer confidence, U.K. RICS house prices, Australia NAB business condition and NAB business confidence, German CPI prelim. and HICP prelim, U.K. industrial production, trade balance and manufacturing production on Tuesday.
Australia Westpac consumer confidence, eurozone industrial production, and U.S. import price index, export price index, retail sales and business inventories on Wednesday.
Australia employment change and unemployment rate, Japan industrial production, capacity and machine tools orders, Switzerland SNB rate decision, Canada new housing price index, and U.S. PPI core, jobless claims on Thursday.
New Zealand ANZ consumer confidence, Bank of Italy releases January’s Public Finance Supplement, eurozone CPI, labour cost, employment, U.S. Empire state manufacturing, CPI, net LT TIC flows, industrial production, capacity utilization, manufacturing production and University of Michigan consumer confidence, and Canada existing home sales on Friday.