Forex U.S. Review – Euro falls on debt concerns, dollar weak on US jobs data

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EURUSD jumped after the U.S. Non farm payroll report showed employment growth stagnated in August but the initial knee-jerk reaction faded and euro continued its fall from earlier in the day as the underlying problem of euro zone debt still exists. News trickled out today that there appears to be a deadlock in talks at the troika regarding the second Greek bailout as the IMF is opposing EU plans to force Greece to put up collateral in its second rescue package. EURUSD fell to a low of 1.4185 from the spike up to 1.4286.

GBPUSD surged to 1.6251 after the US jobs data which showed no new job creation and unemployment stuck at 9.1 percent. Investors initially took refuge in sterling as a safe haven against the tumbling dollar. However, cable soon declined to 1.6169 as investors sold off the pound to take profit rather than hold onto it over the weekend as it could be at risk of falling on Monday when UK services PMI are due, and expectations are not good.

The Swiss franc pared gains against the euro and dollar after top Swiss politicians said they fully support the steps the Swiss National Bank has taken to limit the rally in the record-strong Swiss franc, potentially strengthening the central bank’s resolve to consider currency interventions. Early in the U.S. session, the USDCHF tumbled to 0.7709 on disappointing US jobs data that showed zero job creation in August, fuelling demand for the safe haven Swiss Franc but then the pair bounced up to 0.7879. EURCHF rebounded from the post NFP low of 1.0999 to 1.1190.

The Canadian dollar dipped to a one-week low against its U.S. counterpart after the U.S. jobs report for August came in far weaker than expected, reigniting fears about a global growth slowdown. Due to Canada’s link to the U.S. and it being Canada’s major trading partner, the loonie is greatly affected by the situation of the U.S. economy. Meanwhile, crude oil prices also tumbled on the data, further weighing Canadian commodity-linked currency since Canada is an oil producer and exporter. USDCAD bounced from a pre data low of 0.9768 to a session high of 0.9845.

USDJPY plummeted right after the horrible US Jobs report that showed no change in job creation, and so likely fuelled speculation that the Federal Reserve will embark on another round of quantitative easing soon. USDJPY fell to 76.54 on the news but bounced back up before the end of the session to around 76.78 as the risk of of intervention by the Bank of Japan to curb yen strength limited gains as investors want to be cautious. However, with a long weekend ahead due to the Labor day holiday on Monday, investors want to get rid of dollar.

Gold surged as investors piled to the safe haven investment and turned away from risky currencies and stocks after data showing paralysis in the U.S. jobs market which reinforced fears of recession. Spot gold rose to $1,884.43 from the session open price of $1,852.28.