Euro tumbled against the dollar to a five-week low after the U.S. non-farm payrolls report showed a smaller-than-expected rise in jobs created in June. The much anticipated NFP printed 80,000 jobs, versus the forecasted 90,000 jobs, highlighting the weak U.S. labour market. The unemployment rate remained at 8.2 percent. This created risk aversion and pushed investors away from risk currencies into the safety of the dollar.
EURUSD sank to 1.2329 immediately after the data, breaking below the 1.2365 – 1.2400 range it was trapped in for the vast majority of the EU session. Euro had been consolidating losses following the European Central Bank’s decision to cut interest rates yesterday. Meanwhile, rising Spanish bond yields, which saw the 10 year bond hit the risky 7 percent level, was a major weight on the euro.
Against sterling, euro hit a 3-1/2 year low, tracking a fall in the euro/dollar after lacklustre U.S. jobs data. EURGBP fell to 0.7948 from 0.7968. EURJPY fell to 98.04 from 98.91.
Sterling lost all gains made earlier in the Europe session following the release of UK PPI data. GBPUSD had a choppy session, bouncing from a low of 1.5505 to a session high of 1.5549, followed by a sharp drop to 1.5499after the U.S. jobs data. This brought cable to the lows reached yesterday due to the expansion of QE by the Bank of England.
The U.S. dollar fell sharply against the yen after the U.S. non-farm payrolls report as the weakness in the labour sector will likely raise pressure on the Federal Reserve to do more to boost the economy. USDJPY dropped to 79.52 from 79.91.
The Canadian dollar briefly jumped against the greenback after improved Canadian jobs data but soon the CAD weakened as a result of the weaker than expected U.S. jobs data. This caused risk aversion and a move away from risk currencies like the loonie. USDCAD briefly dipped to 1.0138 after both jobs reports at 12:30 GMT then rose to 1.0181.