Euro Turns Higher Against Dollar As Traders Mull Jobs Data

Sponsored Links

The euro moved higher against the dollar on Friday in New York as a dismal U.S. jobs report showed the American economy is not recovering as fast as expected. The 16-member currency also gained versus the sterling and yen.

The U.S. Labor Department revealed that non-farm payrolls dropped 263,000 in September. Economists had expected a decline of 170,000 jobs. August's results were revised to show a decline of 201,000 jobs.

The euro saw initial weakness against the dollar and yen as traders flocked toward safer currencies. The European currency rebounded within about a half-hour, however. While the dollar saw weakness amid reinforced expectations that the Federal Reserve will keep interest rates near zero, the yen also took a hit from the jobs report as the Japanese economy depends heavily on export sales to the U.S.

In economic news from the Eurozone, France's statistical office INSEE said it expects the gross domestic product to contract 2.2% this year, after growing 0.3% in 2008. For the third quarter, the statistical office expects the economy to grow 0.5% and then rise by 0.3% in the fourth quarter.

At the same time, the Eurostat said today in a report that Eurozone industrial producer price index or PPI dropped 7.5% year-on-year in August, compared with a 8.4% fall in the previous month. The July month figure was revised from 8.5% decline reported initially. Economists expected a decline of 7.6%.

Month-on-month, producer prices increased 0.4% in August, after falling 0.7% in July , revised from 0.8% drop estimated initially. Economists were looking for a decline of 0.4%.

The euro turned higher against the dollar amid choppy trading after earlier reaching a 3 1/2-week high. The European currency hit as high as 1.4647 after earlier falling as low as 1.4480.

Also from the U.S., the Commerce Department said factory orders declined 0.8 percent in August. This followed a 1.4 percent advance in July and a 0.9 percent rise in June.

The euro climbed to a three-day high against the British pound, touching above 0.9100. The 16-member currency had been testing a weekly low near 0.9080.

In the UK, house prices climbed a seasonally adjusted 0.9% month-on-month in September, after a 1.4% rise in the preceding month. Economists expected a growth of 0.7%. The average price of a property increased to GBP 161,816 from GBP 160,224 in August.

The euro also turned to the upside against the yen after earlier hitting a 2 1/2-month low. The European currency reached as high as 131.22 after earlier testing 129.00.

In Japan, Data released by the Ministry of Internal Affairs and Communications showed Friday that the jobless rate decreased to 5.5% in August, on a seasonally adjusted basis, from a record high of 5.7% in July. Moreover, the rate came in below economists' expectations for 5.8%.

(Market News Provided by RTTNews)