US Economic News Tempers Currency Markets on Friday

Posted April 02, 2010

US economic news leads to US dollar rising in value against the euro. Manufacturing numbers are up across the globe.


The currency markets saw an increase in the value of the US dollar during Friday trading. A report out from the US government showed that while employers did add jobs to the payrolls in March, they did so at a lower rate than what was hoped for and forecast. That put a hold on the optimism of a strong and fast economic recovery.

US Dollar

It was so widely expected that job growth would be higher than what it was that the slower pace seemed to be a sign that the economy is stalling on growth and recovery. As has become normal, when the US economy seems to make a turn to even a slightly negative outlook, the US dollar rebounds as currency traders turn to its safety and move away from the more risky investments.

By the numbers, the US dollar moved up 0.4 percent to 94.17 yen, as of early Friday morning trading. That is up from 93.82 during Thursday trading. It moved as high as 94.38 during trading, which is the highest number it has reached since August 26th, 2009. Against the euro, the dollar gained 0.2 percent during the day’s trading. It moved from $1.3589 to $1.3557. When comparing the yen to the euro, the yen moved very little from 127.50 to 127.56.

Employment Numbers

The big newsmaker of the day was the US jobs market. It is widely believed that the jobs market will be a key role player in how fast the US recovers and that would stimulate global improvement in the economy. In March, employers added 162,000 jobs after a revision of 14,000 in the previous month. However, most economists believed that the number of job increases would be much higher, as high as 184,000 jobs. Also important was the unemployment rate, which held at 9.7 percent in the month of March. The number of people filing for unemployment benefits for the first time fell to 439,000.

It is important to note that the financial markets were not active throughout the day Friday as they remained closed in the United States, Hong Kong, Australia and the United Kingdom in observance of Good Friday and the Easter holiday.

The manufacturing data out on Friday also provided some fuel for the currency traders. The US dollar climbed in Thursday trading against the yen after global manufacturing numbers showed an increase. The US expanded manufacturing at the fastest rate since July of 2004. China’s manufacturing also grew and confidence in Japan’s manufacturers also rose.

Rate Increases

Also on the minds of currency traders was the Federal Reserve and whether or not interest rates will rise. It is believed that the Fed should start considering a rise in interest rates by the end of the year, which is earlier than expected by most economists. The increase would come as the dollar strengthens further. The Fed has not announced plans to increase the rate as of yet.