Investing.com - The U.S. dollar tumbled to a three-and-a-half month low against the euro on Friday and fell to its lowest level in a month against the yen, after weaker-than-expected U.S. employment data fuelled expectations for another round of easing from the Federal Reserve.
The Department of Labor said the U.S. economy added 96,000 jobs in August, well below expectations for 125,000, following a downwardly revised 141,000 in July.
The smaller-than-expected increase in job creation increased the chances that the U.S. central bank will implement further quantitative easing measures to strengthen the U.S. economic recovery, ahead of its upcoming policy meeting.
Following the data, the euro rallied 1.46% against the dollar to hit 1.2815, its highest level since May 22. Against the yen, the dollar fell to 78.00, the lowest level since August 1, before easing back to settle at 78.24, down 0.77% on the day.
The U.S. jobs data came one day after the European Central Bank announced details of its bond purchasing program aimed at stemming the debt crisis in the euro zone, dubbed Outright Monetary Transactions.
Speaking at the back’s post-policy meeting press conference on Thursday, ECB President Mario Draghi said the plan would provide "a fully effective backstop" against market volatility.
Under the terms of the plan, the ECB would buy unlimited amounts of government bonds of up to three years in maturity, as long as the country in question is signed up to the OMT program and agrees to economic reforms in return for assistance.
The yield on Spanish 10-year bonds settled at 5.63% on Friday, falling below the 6% level for the first time since May, while the yield on Italian 10-year bonds fell to 5.05% by the close on Friday.
Sterling advanced to a four-month high of 1.6033 against the broadly weaker dollar on Friday, but dropped to a two-month low of 0.8003 against the stronger euro.
On Thursday, the Bank of England kept its benchmark interest rate unchanged at 0.50% and announced no change to the size of its asset purchase program.
Elsewhere, the Canadian dollar rose to its highest level in almost one-year against its U.S. counterpart on Friday after official data showed that Canada added 34,300 jobs in August, outstripping expectations for a 10,000 increase and erasing the previous months 34,400 decline.
In the coming week, investors will be focusing on the outcome of the Federal Reserve’s policy meeting on Thursday, amid ongoing speculation over how close policymakers are to implementing more stimulus measures.
Market participants will also be eyeing Wednesday’s German court ruling on the constitutionality of the European Stability Mechanism.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 10
Japan is to release government data on the current account as well as final data on gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health.
Meanwhile, Australia is to produce official data on home loans, a leading indicator of demand in the housing market.
The euro zone is to release data on investor confidence, while France is to publish official data on industrial production.
Tuesday, September 11
The U.K. is to publish industry data on house price balance, a key gauge of housing inflation.
Elsewhere, Japan is to produce government data on manufacturing activity, a leading indicator of economic health.
Also Tuesday, Australia is to release a report on business confidence, while New Zealand is to produce industry data on house price inflation, an important signal of the housing industry’s health.
Later in the day, the U.K., Canada and the U.S. are to produce reports on their respective trade balances, the difference in value between imported and exported goods and services.
Wednesday, September 12
Japan is to publish government data on core machinery orders, a leading indicator of production, as well as on tertiary industry activity, a key gauge of economic health.
Meanwhile, Australia is to produce industry data on consumer sentiment.
The euro zone is to produce official data on industrial production, while Italy is to publish individual data.
Separately, the German Federal Constitutional Court is to announce a ruling regarding the constitutionality of the European Stability Mechanism.
Elsewhere, the U.K. is to produce official data on claimant count change and the unemployment rate, leading indicators of economic health.
Later in the day, the U.S. is to release official data on import prices, followed by a government report on crude oil stockpiles.
Thursday, September 13
The Reserve Bank of New Zealand is to announce its benchmark interest rate; the announcement is to be accompanied by the bank’s rate statement, which contains insights into current economic conditions from the bank’s perspective.
Australia is to produce a report by the Melbourne Institute on inflation expectations.
Switzerland is to publish official data on producer price inflation, a leading indicator of consumer inflation. The Swiss National Bank is also to release the Libor rate, followed by its monetary policy assessment, which will be closely watched.
In the euro zone, the ECB is to produce its monthly bulletin, which reveals the statistical data that the ECB Governing Board evaluated when making its latest interest rate decision.
Separately, Italy is to hold an auction of 10-year government bonds, which will be an important test of investor appetite for the country’s debt.
Later in the day, Canada is to release official data on new housing price inflation, a leading indicator of the housing industry’s health.
The U.S. is to publish government data on producer price inflation, as well as a weekly report on initial jobless claims.
The Federal Reserve is to announce its benchmark interest rate; the announcement is to be accompanied by the bank’s rate statement, which contains insights into current economic conditions from the bank’s perspective.
Friday, September 14
In the euro zone, official data is to be published on consumer price inflation. Meanwhile, European Union finance ministers are to hold a first day of talks in Brussels.
Elsewhere, Canada is to produce official data on manufacturing sales, a leading indicator of economic health.
The U.S. is to round up the week with official reports on consumer price inflation, retail sales and business inventories. The Federal Reserve is also to release data on the capacity utilization rate and industrial production, while the University of Michigan is to produce preliminary reports on consumer sentiment and inflation expectations.
The Department of Labor said the U.S. economy added 96,000 jobs in August, well below expectations for 125,000, following a downwardly revised 141,000 in July.
The smaller-than-expected increase in job creation increased the chances that the U.S. central bank will implement further quantitative easing measures to strengthen the U.S. economic recovery, ahead of its upcoming policy meeting.
Following the data, the euro rallied 1.46% against the dollar to hit 1.2815, its highest level since May 22. Against the yen, the dollar fell to 78.00, the lowest level since August 1, before easing back to settle at 78.24, down 0.77% on the day.
The U.S. jobs data came one day after the European Central Bank announced details of its bond purchasing program aimed at stemming the debt crisis in the euro zone, dubbed Outright Monetary Transactions.
Speaking at the back’s post-policy meeting press conference on Thursday, ECB President Mario Draghi said the plan would provide "a fully effective backstop" against market volatility.
Under the terms of the plan, the ECB would buy unlimited amounts of government bonds of up to three years in maturity, as long as the country in question is signed up to the OMT program and agrees to economic reforms in return for assistance.
The yield on Spanish 10-year bonds settled at 5.63% on Friday, falling below the 6% level for the first time since May, while the yield on Italian 10-year bonds fell to 5.05% by the close on Friday.
Sterling advanced to a four-month high of 1.6033 against the broadly weaker dollar on Friday, but dropped to a two-month low of 0.8003 against the stronger euro.
On Thursday, the Bank of England kept its benchmark interest rate unchanged at 0.50% and announced no change to the size of its asset purchase program.
Elsewhere, the Canadian dollar rose to its highest level in almost one-year against its U.S. counterpart on Friday after official data showed that Canada added 34,300 jobs in August, outstripping expectations for a 10,000 increase and erasing the previous months 34,400 decline.
In the coming week, investors will be focusing on the outcome of the Federal Reserve’s policy meeting on Thursday, amid ongoing speculation over how close policymakers are to implementing more stimulus measures.
Market participants will also be eyeing Wednesday’s German court ruling on the constitutionality of the European Stability Mechanism.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 10
Japan is to release government data on the current account as well as final data on gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health.
Meanwhile, Australia is to produce official data on home loans, a leading indicator of demand in the housing market.
The euro zone is to release data on investor confidence, while France is to publish official data on industrial production.
Tuesday, September 11
The U.K. is to publish industry data on house price balance, a key gauge of housing inflation.
Elsewhere, Japan is to produce government data on manufacturing activity, a leading indicator of economic health.
Also Tuesday, Australia is to release a report on business confidence, while New Zealand is to produce industry data on house price inflation, an important signal of the housing industry’s health.
Later in the day, the U.K., Canada and the U.S. are to produce reports on their respective trade balances, the difference in value between imported and exported goods and services.
Wednesday, September 12
Japan is to publish government data on core machinery orders, a leading indicator of production, as well as on tertiary industry activity, a key gauge of economic health.
Meanwhile, Australia is to produce industry data on consumer sentiment.
The euro zone is to produce official data on industrial production, while Italy is to publish individual data.
Separately, the German Federal Constitutional Court is to announce a ruling regarding the constitutionality of the European Stability Mechanism.
Elsewhere, the U.K. is to produce official data on claimant count change and the unemployment rate, leading indicators of economic health.
Later in the day, the U.S. is to release official data on import prices, followed by a government report on crude oil stockpiles.
Thursday, September 13
The Reserve Bank of New Zealand is to announce its benchmark interest rate; the announcement is to be accompanied by the bank’s rate statement, which contains insights into current economic conditions from the bank’s perspective.
Australia is to produce a report by the Melbourne Institute on inflation expectations.
Switzerland is to publish official data on producer price inflation, a leading indicator of consumer inflation. The Swiss National Bank is also to release the Libor rate, followed by its monetary policy assessment, which will be closely watched.
In the euro zone, the ECB is to produce its monthly bulletin, which reveals the statistical data that the ECB Governing Board evaluated when making its latest interest rate decision.
Separately, Italy is to hold an auction of 10-year government bonds, which will be an important test of investor appetite for the country’s debt.
Later in the day, Canada is to release official data on new housing price inflation, a leading indicator of the housing industry’s health.
The U.S. is to publish government data on producer price inflation, as well as a weekly report on initial jobless claims.
The Federal Reserve is to announce its benchmark interest rate; the announcement is to be accompanied by the bank’s rate statement, which contains insights into current economic conditions from the bank’s perspective.
Friday, September 14
In the euro zone, official data is to be published on consumer price inflation. Meanwhile, European Union finance ministers are to hold a first day of talks in Brussels.
Elsewhere, Canada is to produce official data on manufacturing sales, a leading indicator of economic health.
The U.S. is to round up the week with official reports on consumer price inflation, retail sales and business inventories. The Federal Reserve is also to release data on the capacity utilization rate and industrial production, while the University of Michigan is to produce preliminary reports on consumer sentiment and inflation expectations.