FX news and analysis

USD

The dollar traded mixed on Friday, rising against the yen and the aussie, falling against the euro and oscillating versus the pound. Overall a rise in risk appetite weighed on the greenback after more positive commentary from ECB's Mario Draghi in which he reiterated the central bank's readiness to undertake bond-buying to help indebted member states, if required. Sentiment was further supported by U.S employment data which showed a surprise drop in the Unemployment Rate to 7.8% from 8.1% in the preceding month, when a rise to 8.2% had been expected. U.S Non-Farm Payrolls also rose more than expected in September – coming out at 114k when 113k had been forecast. The preceding month's 96k print was also revised up to 142k, which also bolstered sentiment.

EUR

The euro rose after Mario Draghi talked up the readiness of the ECB to 'step in' with financial help for struggling member states. The president of the ECB underlined the central bank willingness to use measures which he emphasized lay strictly within it's mandate, which included sovereign bond-buying – or Outright Monetary Transactions (OMTs). In a come hither to Madrid he added that the ECB was ready and waiting to use it new measures if the requirement arose. Markets seemed to ignore poor data which revealed a -4.8% fall in German Factory Orders on an annualized basis in August versus -4.3% expected and -4.6% previously. German Factory Orders m/m (Aug), meanwhile fell by -1.3% from -0.5% expected and 0.3% previous.

GBP

The pound traded mixed on Friday, rising versus the dollar as it rode a wave of risk appetite stimulated by the better-than-expected employment figures but falling to the euro which rose on renewed expectations of a Spanish bailout after ECB President Mario Draghi shot more come hither remarks to Madrid, reiterating the central bank's readiness to use its bond-purchases to aid struggling peripherals. Sterling benefited less from the rise in risk appetite then the euro however, because of the recent run of below-expectation data. All three PMI's this week contracted below expectations and the two house price surveys from Rightmove and Halifax showed worse-than-feared falls in house prices, thus raising the spectre of more Bank of England QE.

JPY

The yen fell on Friday, particularly after the release of U.S jobs data, which showed a dramatic fall in the Unemployment Rate. Expectations of a rise to 8.2% from 8.1% originally proved overly pessimistic as the rate fell to 7.8% in September. Non-Farm Payrolls also showed a greater level of hiring taking place. However, the main event for the yen on Friday was the BOJ rate meeting. Speculation of more easing or other measures to stimulate the economy and drive up inflation towards the government's steadily receding 1.0% target failed as the governing council mentioned no-change. The recent weaknesses in the yen could be partly as a result of tougher talk over the growing problem of deflation and also the negative impact of the strong yen. Investors could be put off by increasing pressure from the re-shuffled cabinet and deflationary readings which could indicate a greater chance of intervention in the future.