Euro Pared Losses, Aussie Rocketed on Employment Data | IFCM
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Euro Pared Losses, Aussie Rocketed on Employment Data - 12.4.2012

US Dollar The dollar fell against the majors yesterday as the currency’s index dropped to a one-week low of 79.50. Federal Reserve Vice Chairman Janet Yellen confirmed that the central bank would probably encourage borrowing costs to stay low until late 2014. “I consider a highly accommodative policy stance to be appropriate in present circumstances” with unemployment declining “only gradually”, Yellen said. At the same time the Fed reported in its Beige Book survey, also published yesterday, that economic growth pace was “modest to moderate from mid-February through late March”. In Asian trading hours the greenback lost some more ground against the most liquid peers, except the Japanese yen, before March’s producer prices and February’s trade balance data are released. Euro The single currency is showing modest gains versus the dollar and the Japanese yen, although remaining in tight ranges, as Spain’s and Italy’s borrowing costs dropped from recent highs. The benchmark Spanish 10-year bond yields fell to 5.88% from almost 6% a day earlier, while Italian yields fell from almost 5.7% to 5.53%. However at yesterday's short-term Italian debt auction investors demanded higher yields in comparison with the previous debt sale in March. The Treasury sold 8 billion euros of 1-year bills at 2.84%, compared with 1.40% at the previous auction, and 3 billion of 3-month bills at 1.25%, compared with 0.5% at the previous sale. Today Italy is scheduled to sell up to 5 billion euros of medium-term notes. In Asian trading the euro rose from 1.3106 to 1.3145 versus the dollar and from 105.96 to 106.42 versus the yen. Japanese Yen Bank of Japan Governor Masaaki Shirakawa said in a speech early in the morning that monetary authorities are ready to aid economic recovery and take measures to ensure price stability. “The Bank of Japan will pursue powerful easing” in order to reach sustainability in growth and avoid deflationary developments, he said. However the central bank abstained from adding stimuli at the latest policy meeting on April 10, after expanding bond purchase program by 10 trillion yen in February and setting inflation target at 1%. After touching yesterday the lowest level in six weeks against the yen at 80.57 the dollar rose to 81.06 in the morning. Australian Dollar The Australian Bureau of Statistics reported today that the number of people employed increased in March by 44000, much more than expected on average, after falling by 15400 in the previous month. Despite the unemployment rate remained unchanged at 5.2%, the total net hiring in the first quarter reached 76700, showing the biggest quarterly gain since the last quarter of 2010. The aussie rallied as the data surprised investors and probably reduced the urgency in decreasing interest rate by the central bank. The local currency rose from 1.0301 to 1.0384 versus the dollar by the end of the session, after touching yesterday a 3-month low at 1.0225.
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