Dollar Plunges In Broad Sell-Off

The Dollar plunged against the euro, Japanese Yen and other currencies as investors reduced bets on the greenback on concerns applying to Friday’s U.S. jobs report. The EUR/USD traded at 1.3262. American stocks fell in tandem with a weaker USD, but rebounded to end in positive territory. The Dow Jones added 0.53 % to climb back above the 15.000 level. The Nasdaq gained 0.66 % to 3 424. The changes seemed to be technically driven by psychological factors.

A poll amongst economists expects 170 000 new jobs could've been added to the U.S. economy in May, with an unemployment rate of 7.5 %. However, fear of a weaker than expected job report prompted investors to unwind bets on a Dollar that had been profitable for months. Gold prices, which have been under strong pressure for months, suddenly rose 1 percent to USD 1412 an ounce as investors sold long positions on the Dollar.

The Euro gained after the European Central Bank left interest rates unchanged. Mario Draghi, stated that further monetary support was unlikely in the near future. The ECB has kept interest rates at a record low of 0,5 % waiting for a turnaround in the eurozone. The Bank of England also chose to leave its loose monetary policy unchanged. The GBP jumped against the Dollar at 1,5612, gaining substantially in recent days from low 1.51 levels.

Concerns that the key U.S. job data will prove disappointing sent the Japanese Nikkei into bear territory in Asia Friday morning. The Nikkei plunged 1.9 % to a two month low. The Nikkei has lost 20 % from a five-and-half-year high, just two weeks ago. Other Asian stocks failed to capitalize on overnight gains on Wall Street. The Asian Pacific MSCI-index fell 0.6 % to its lowest level since November. The fall in equities seem to indicate a stronger appetite among investors for safe haven bonds. The yield on U.S., German and Japanese bonds has risen recently.

Oil prices are higher on the back of a weaker Dollar. Brent crude trades close to USD 104 a barrel, up from the USD 100 mark earlier in the week.