The U.S. dollar remained weak against most of its peers days after the Non-Farm Payroll release disappointed market investors by denoting that U.S. employers did not hire as many workers as analysts had predicted. Speculators await the release of the most recent policy meeting minutes in order to gain insight into the future of U.S. monetary policy. With the data showing that the Unemployment Rate remains at 6.7 percent rather than the 6.6 percent economists had hoped for, the Fed may stall on reducing stimulus any further, especially as Fed Chairwoman Janet Yellen stated that policy makers would take all data into account before making any moves. In the meantime, Gold Futures for delivery in June dipped to $1,299.00 a troy ounce on the New York Mercantile Exchange, after rallying over 1 percent on Friday. With a lack of economic fundamentals out of the U.S. at the start of the week, investors predict that the shiny metal could continue to respond to market sentiment.
The euro climbed against the greenback as the creation of 192,000 new U.S. payrolls in March continued to weigh on the dollar. And in the euro region, comments by european Central Bank President Mario Draghi eased concerns that the bank will sit idle while the region could be facing a period of deflation. The shared currency was bolstered when policy maker Yves Mersch stated that the bank may consider buying more assets in the future in order to push inflation to the upside; however, he reiterated that currently there was no need to implement such a plan. The British pound traded lower against the U.S. dollar subsequent to soft PMI Surveys out of the U.K., even as the Services PMI denoted growth over the past month. The Sterling gained during morning hours on Monday despite the thin volume of trading.
The yen advanced versus the U.S. dollar and traded mixed versus the euro as market traders await the Bank of Japan’s next move on monetary policy. Experts anticipate that policy makers could decide to double their exchange-traded fund purchases during the next round of easing.
Lastly, in the South Pacific, news about the implementation of what the Chinese call a “mini-stimulus” plan helped the two currencies rise versus their U.S. counterpart. Economists predict that the new projects will help boost exports from the two nations to China. In Australia, the number of Job Ads went up by 1.4 percent in March, following a hike of 4.7 percent in February.
EUR/USD: Draghi Goes To The U.S.
The EUR/USD climbed while Mario Draghi, the President of the european Central Bank, prepares to attend the International Monetary Fund’s meeting in the U.S. When he departs for Washington, policy makers will have to assess whether this is the right time to implement another round of stimulus. The EUR/USD was bolstered by comments that deflation pressures are not considered a serious problem at this time. Mr. Draghi is anticipating scrutiny after the bank decided last week to leave monetary policy unchanged. Executive Board Member Yves Mersch stated that the implementation of new measures won’t take place at present, and if the bank goes ahead with purchases, it will be of private securities rather than of public debt. The EUR/USD weakened later on, as investors await the publication of the Federal Reserve’s policy meeting minutes tomorrow; and it traded to the upside, despite the fact that euro-zone leaders have indicated that the risks of deflation have been contained.
GBP/USD: Pound Up In Thin Trade
The GBP/USD climbed on Monday despite subdued trading in the markets. The pair’s rally was partly due to the weak dollar, which has remained unchanged since Friday, when the Labor Department reported that the employment sector created 192,000 payrolls and missed the forecast 200,000. The GBP/USS was also supported despite soft U.K. macroeconomic fundamentals published last week showing that the PMI surveys did not meet expectations, and it remained high before the Bank of England meets this week.
EUR/JPY: Draghi Comments Impact euro
The EUR/JPY climbed at the start of the week after the pair traded mixed following the european Central Bank’s decision to leave the interest unchanged, and to refrain from adding stimulus despite talk about the need for new measures. Comments by ECB President Draghi continued to fuel the pair’s strength, although economists predict that the head of the ECB will face scrutiny when he talks about expanding monetary easing at the IMF’s meeting in Washington. A German newspaper reported that there are rumors about the possible buying of a trillion euros in assets in order to stave off deflation, just days after policy makers said that the low level of inflation are not a serious problem at this time. In Japan, analysts are wondering whether Abenomics has provided a real solution to the country’s economic problems. Japan has posted five consecutive quarters of economic growth, but the progress may be derailed by a recent hike in sales tax. The Bank of Japan is predicting that there may be a drop in consumption, a factor which raised speculation that the BOJ could double its purchasing of exchange-traded funds or bonds.
NZD/USD: House Prices Climb
The NZD/USD remained more or less unchanged after it rallied on Friday. Forex investors were shaken by Friday’s U.S. Non-Farm Payroll reports and they traded cautiously ahead of the release of the FOMC minutes. Meanwhile, in New Zealand, Quotable Value New Zealand, a firm that is owned by the government, issued a statement indicating that House Values climbed by 8.8 percent in March. The NZD/USD dipped slightly on Monday as the markets awaited the publication of the Fed’s Monetary Policy Meeting minutes in order to gauge whether officials plan to cut back further on stimulus.
Daily Outlook: Today’s economic calendar shows that Switzerland will release data on Retail Sales and the Unemployment Rate. The U.K. will issue Industrial and Manufacturing Production as well as the NIESR GDP Estimate. In Japan, the central bank may hold a Press Conference. And lastly, Australia will announce Westpac Consumer Sentiment and Home Loans.