GO
Loading...

RPT-FOREX -Dollar down, Aussie sinks on poor jobs data

Patrick Graham
Thursday, 13 Feb 2014 | 4:54 AM ET

* Dollar down, euro, yen and franc profit from halt in stocks rally

* Aussie dollar, Swedish crown slide after weak jobs numbers

* Euro recovers from talk of negative deposit rate

* Focus on U.S. retail sales later in day to give dollar incentive

LONDON, Feb 13 (Reuters) - The dollar lost almost half a percent against the safe haven yen and Swiss franc and fell back from overnight gains to the euro as a rally in global shares halted on Thursday.

The Australian dollar, looking in better shape this month after a 10 percent slide since October, dived almost 1 percent after an unexpectedly weak domestic jobs report. Sweden's crown also fell on the back of a similarly poor data.

A strong dollar against its major currency peers is a central bet for many banks this year but the sharp move higher in U.S. Treasury yields that had been expected to deliver that trend has so far failed to materialise.

One explanation is that a sell-off in emerging markets, the other side of a shift in global capital due to the Federal Reserve reining in monetary stimulus, has benefitted other currency areas at least as much as the dollar.

"The dollar's safe haven status has been eroded and as equities come off, the dollar index is also a bit lower," said Peter Kinsella, strategist with Commerzbank in London.

The dollar index is down 0.2 percent at 80.494.

Against the yen, the dollar was down 0.4 percent in early European trade at 102.09 yen, with dealers citing support for the U.S. currency around 101.90 yen. They said there were Japanese exporters orders to buy yen at 102.50-70 yen.

"Just on the basis of the charts that (102.70) looks like a stretch," Kinsella said.

Against the euro, the dollar fell 0.2 percent to 1.3626. Weekly U.S. jobless claims and January U.S retail sales data due later on Thursday may offer further direction.

JOBS SHOCK

The Aussie was a big loser among major currencies in the last quarter of 2013, hit by slowing growth in China and a central bank campaign of rate cuts aimed at weakening the currency and prodding the economy back into life.

That move had seemed to be nearing an end earlier in February when the Reserve Bank dropped its easing bias and scaled back its verbal campaign against the dollar.

The jobs data on Thursday, however, stiffed expectations for a net gain of 15,000 jobs in January, instead showing another 3,700 Australians out of work. Unemployment rose to 6.0 percent, the highest since July 2003 and above forecasts.

The Aussie fell as much as 1.1 percent, before recovering to trade at $0.8949.

UBS analyst Gareth Berry argued that, with the Fed halting the flow of dollars that has propped up the Aussie over the past year, the currency would now see more impact from the two full percentage points cut off base rates since the end of 2011.

"There was minimal currency reaction to the first 175 bp worth of rate cuts," he said. "Now the shoe is very much on the other foot, as the market reaction to the soft employment data overnight demonstrated.

"We look for the Aussie to drop towards $0.86 over the next three months."