Euro Falls As Traders Worry About Jobs Data

Posted June 04, 2010

During the currency trading session on Thursday, the euro fell again. This time, the currency traders were worried about the jobs data to be released on Friday morning.


The Euro Zone

Aside from the worries out of the US from economic reports, the euro feel against the dollar during the trading session on Thursday due in part to the widening euro zone bond spreads. Notably, the Italian and Spanish bond spreads to benchmark German bonds are considered the worst in the region. They are not higher than they were during the panic that took over the region during the Greek debt crisis. This further shows that the euro zone countries have investors more concerned about their credit worthiness than they were in the past. Italy and Spain have become less worthy of credit in the eyes of investors since they first adopted the euro. Further, the Portugal and Greece spreads are already lower than what the pre euro levels were as well. Each of these countries have promised fiscal tightening but this has not offered any aid to the currency traders who still took to higher ground.

By The Numbers

By the late afternoon in trading on Thursday, the euro moved to US $1.2156. That low is very close to the four year low of US $1.2110 that many currency traders consider the bottom. The euro was down from US $1.2236 as of late Wednesday's trading session.  The US dollar moved from Y 92.16 to Y 92.64. The euro moved from Y 112.73 as of late Wednesday's trading to Y 112.63 by the end of the day. The US dollar moved from CHF 1.1555 to CHF 1.1564. The UK pound moved from US 1.4649 to US $1.4615. The UK pound was able to improved to US $1.4743 before moving back.

The ICE Dollar Index, which pairs the US dollar against a trade weighted basket of currencies moved from 86.772 on Wednesday at the close of the session to 87.240.

The Swiss Franc

During the trading session on Wednesday, the weakness in the euro allowed it to fall below the psychological mark of 1.4100 Swiss francs. This level is important because many investors believed that at this level the Swiss central bank would step in to support the franc. However, during the trading session for the day, there was no actual indication of the Swiss central bank moving in the market. The euro would end the trading day in New York by trading at CHF 1.4063.

US Data Concerns

Also on the minds of traders during the currency trading session was the economic data that was due out from the US on Friday morning. There is often some caution from investors when key nonfarm payroll reports are to be released. It is believed that this caution, and the worry that the any gains in the US jobs market would be due to the national census rather than true job growth, caused investors to pare down their moves against the euro for the trading day.