Investing.com - The dollar slid against the other major currencies on Friday, reversing a rally earlier in the week after data showed that the U.S. economy added jobs at the slowest monthly rate this year in August.
The Labor Department reported that that U.S. economy added 142,000 jobs last month, disappointing expectations for jobs growth of 225,000. July’s figure was revised up to 212,000.
The unemployment rate ticked down to 6.1% from 6.2% in July.
The report eased concerns that the recovery in the U.S. economy is progressing so rapidly that the Federal Reserve will be forced to raise rates sooner prevent the economy from overheating.
EUR/USD hit session highs of 1.2988 following the release of the jobs report, but then retraced most of those gains to settle at 1.2951, trading 0.05% higher late Friday.
USD/JPY fell to lows of 104.70 before pulling back to 105.08, still down 0.16% on the day.
The dollar remained supported after other economic reports earlier in the week indicated that the U.S. recovery is still on track. Data on Tuesday showed that the country’s manufacturing sector expanded at the fastest rate in more than three years in August.
The Fed is expected to wind up its asset purchase program in October and to start raising interest rates sometime in mid-2015. In contrast, the European and Japanese central banks look likely to stick to a looser monetary policy stance.
The euro tumbled to a 14-month low against the dollar on Thursday after the European Central Bank cut rates to record lows across the euro zone and announced fresh stimulus measures in an attempt to shore up slowing growth and inflation in the region.
ECB President Mario Draghi said the decision came after long term inflation expectations deteriorated in August.
USD/CHF was trading at 0.9309 late Friday, off the one year highs of 0.9334 set earlier in the session.
GBP/USD was at 1.6324, after falling to lows of 1.6279 earlier, the weakest level since early February. Sterling remained under heavy selling pressure amid uncertainty over the outcome of a referendum on Scottish independence, due to take place on September 18.
Also Friday, the Canadian dollar fell against the greenback after official data showed that Canada’s economy unexpectedly shed jobs in August.
Statistics Canada reported that the economy lost 11,000 jobs last month, compared to forecasts for jobs growth of 10,000.
USD/CAD touched highs of 1.0901 before paring back gains to 1.0879, up 0.06% in late trade.
In the week ahead, investors will be looking ahead to Friday’s U.S. data on retail sales and consumer sentiment for further indications on the strength of the economic recovery.
Testimony on inflation by Bank of England officials on Wednesday and the outcome of a rate review by New Zealand’s central bank on Thursday will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 8
Japan is to release data on the current account as well as final data on second quarter economic growth.
Markets in China are to remain closed for a national holiday; however the country is to release data on the trade balance, the difference in value between imports and exports.
In the euro zone, Germany is to release a report on the trade balance.
Elsewhere in Europe, Switzerland is to produce data on consumer price inflation, which accounts for a majority of overall inflation.
Later Monday, Canada is to release data on building permits.
Tuesday, September 9
The Bank of Japan is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Japan is also to release data on tertiary industry activity.
Australia is to release private sector data on business confidence as well as a report on home loans.
The U.K. is to produce data on industrial and manufacturing production and a report on the trade balance. Meanwhile, Bank of England Governor Mark Carney is to speak at an event in Manchester; his comments will be closely watched.
Canada is to release a report on housing starts.
Wednesday, September 10
Japan is to release data on core machinery orders.
Australia is to release a private sector report on consumer sentiment.
BoE Governor Mark Carney and several monetary policy committee members are to testify on inflation and the economic outlook before Parliament’s Treasury committee.
Thursday, September 11
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank is also to hold a press conference to discuss the monetary policy decision.
Australia is to release a report on the change in the number of people employed and the unemployment rate.
China is to release data on consumer price inflation.
The U.S. is to produce the weekly report on initial jobless claims.
Friday, September 12
BoJ Governor Haruhiko Kuroda is to speak at an event in Tokyo; his comments will be closely watched.
The euro zone is to release data on industrial production.
The U.S. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to release what will be closely watched preliminary data on consumer sentiment.