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Forex - USD/JPY drops on poor U.S. August jobs report

Published 09/07/2012, 01:49 PM
Updated 09/07/2012, 01:50 PM
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Investing.com - The dollar dropped against the yen on Friday after the U.S. government revealed the economy picked up far less jobs in August than expected.

In U.S. trading on Friday, USD/JPY was trading at 78.22, down 0.81%, up from a session low of 78.02 and off a high of 79.02.

The pair was likely to find support at 78.02, the earlier low, and resistance at 79.02, the earlier high.

The Bureau of Labor Statistics reported earlier that the U.S. economy created a net 96,000 nonfarm payroll jobs in August, well below market calls for 125,000 jobs.

The jobs report quickly fueled already growing sentiment that the Federal Reserve will roll out a third round of quantitative easing, possibly at its Sept. 12-13 monetary policy meeting.

Under quantitative easing, the Fed buys assets such as Treasury holdings or mortgage-backed securities held by banks, pumping the economy full of fresh liquidity in a way that pushes down interest rates to encourage investing and hiring.

Such accommodative policies tend to weaken the dollar by design.

The Bureau of Labor Statistics added that July's figures were revised down to 141,000 from 163,000, while June's figures were revised down to 45,000 from 64,000, further stoking market calls for Fed intervention.

The unemployment rate stood at 8.1% in August, down from 8.3% in July as more jobless workers exited the labor force.

The yen was up against the pound and down against the euro, with GBP/JPY down 0.32% and trading at 125.25 and EUR/JPY up 0.41% and trading at 100.02.










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