Forex Asia Review – Yen strengthens, U.S. dollar weak ahead of jobs report

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USDJPY opened Asia at 76.70 and gradually declined to 76.53 as the dollar continued to weaken ahead of a U.S. jobs report due later today which is predicted to shower fewer jobs were added in the U.S. this month, boosting prospects the Fed will signal more measures to spur growth. Minutes of the Fed’s early August meeting released on Tuesday fuelled speculation about further monetary easing by the Fed. This helped bolster yen. Data today showed factory output in Japan trailed economists estimates but Japanese exporters buying yen to adjust month-end balances helped boost yen.

 

EURUSD opened the session at 1.4441 and fell to 1.4416 before consolidating after a huge drop yesterday on speculation that the ECB will not hike rates until mid 2012 based on Trichet comments, which renewed concerns of sluggish euro zone growth. An unemployment report due later today shows economists forecast unemployment in the region remained last month at its highest level since February, adding to signs that Europe’s economic recovery is faltering.

 

GBPUSD opened 1.6296 and had a quiet Asian session, remaining flat after big drop on Tuesday following weak data and general risk aversion.

 

AUDUSD consolidated in Asia just below its four week high reached I the U.S. session yesterday when commodity linked currencies surged after the Federal Reserve meeting notes showed some members had favoured further action and fuelled expectations of more U.S. stimulus which means the greenback could weaken if the Fed takes additional measures to stimulate the economy. After dipping to 1.0650, AUDUSD rose back to 1.0699.

 

Gold was little changed during the quiet Asian session. The metal opened Asia at $1,835.12 and flattened out after a jump of over $40 an ounce in the New York session after FOMC minutes suggested dollar could weaken if the Fed were to take measures to stimulate the U.S. economy. Gold and dollar have an inverse relationship.