The U.S. Dollar got a well-received boost following Friday’s release of surprisingly upbeat labor data from the U.S. Department of Labor which revived investor expectations that the Fed might reconsider tapering its QE program in December. Initially, analysts had believed that the federal government’s two-week long shutdown might negatively impact the creation of new jobs, and a consensus polled expected a drop to 125,000 new jobs, but actual numbers improved for October to 204,000 while September’s were revised upward to 163,000 from the originally reported 148,000. Though the unemployment rate edged higher to 7.3%, the upside surprise suggests that the U.S. economy might be on more solid footing than many had believed.
As reported at 11:11 a.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 81.262 .DXY, easing back 0.1% in Asian trade but holding close to Friday’s 2-month peak of 81.482 .DXY. Some analysts believe that the jobs data has provided significant and perhaps enduring support for the greenback. The EUR/USD pair traded 0.1% lower to $1.3357, staying close to last week’s low after the ECB surprised markets with a rate cut. The USD/JPY traded steadily at 99.04 Japanese Yen, keeping much of Friday’s nearly 1% gains.
Markets to Focus on Central Banks
Analysts say that they will wait to see if there is one more month of solid jobs data before joining market players’ expectations of the Fed’s tapering. They believe that with that data in hand they will be able to better gauge the Fed’s intentions. Markets will also scrutinize the Eurozone’s upcoming economic data as the ECB cautioned that it still had scope for further rate cuts.