The U.S. Dollar is mounting a strong rally this morning against most major currencies in reaction to a slightly better than expected March Non-Farm Payrolls Report. The actual number showed an increase of 216,000. The March Unemployment Rate at 8.8% was the lowest in 2 years.
The Euro is rebounding this morning after a sharp sell-off on Wednesday. Pressure was on the single currency yesterday following the confirmation of a technical closing price reversal top the day before. Fundamentally, traders turned bearish on the currency after Moody’s Investors Service downgraded 30 Spanish banks and following the resignation of Portugal’s prime minister.
After a break to nearly 76.00 on Thursday, the USD JPY rallied overnight after the Group of Seven nations agreed to take steps to curb the Japanese currency’s rapid rise. The wave of coordinated intervention by the global financial powerhouse also known as the G-7 is an attempt to stabilize the Yen and bring it back to more respectable levels following the post-earthquake rally.
The surprise this week in the Forex markets is the inability of the U.S. Dollar to attract fresh investors given the escalating problems in the Middle East and North Africa. With crude oil and gold rising as traders take protection, many traders thought the Greenback would benefit from flight-to-safety buying.
The Euro was trading inside of Thursday’s range as traders waited for the release of the U.S. 4Q GDP number. Upon the release of the report, the Euro had a violent, two-directional move before settling near the center of the overnight range.
The USD JPY strengthened for a second day as traders turned a little more optimistic about a U.S. economic recovery. Traders are looking for a slight improvement in the U.S. jobs market this Friday. This is helping to support the idea that while the U.S. economy may not be boosting a strong uptrend, it is most likely building a stronger support base.
Equity investors are looking at the long side of the market this morning as friendly talk out of Europe regarding the Irish debt crisis is renewing interest in risky assets.
The British Pound strengthened this morning after the Bank of England said inflation may continue to accelerate above its 2 percent target, reducing the chances that the central bank will reignite asset purchases.
Stocks and precious metals are trading sharply higher this morning after the Fed announced it would inject fresh liquidity into the economy. The expected move by the Fed is weakening the Dollar and driving new money into U.S. stocks and global commodities.
U.S. equity markets are called higher this morning buoyed by increased demand for higher risk assets and underpinned by forecasts of a Republican victory in today’s elections.
