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New York Summary--A Weak Euro Rally

Posted by Joseph Trevisani on Sep 5, 2014 4:23:00 PM

The euro opened at 1.2954 in New York near the top of the 1.2922-1.2965 Tokyo/London range. Stronger German industrial production provided support but the majority of the recovery was due to profit taking on yesterday's almost 2 percent decline against the dollar following the ECB policy announcements.

U.S. non-farm payrolls for August at 8:30 am were a disappointing 142,000, far below the 230,000 forecast and the euro jumped from 1.2944 to 1.2988 within seconds. The balance of the employment situation report from the Labor Department was mediocre as well. The unemployment rate dropped 0.1 percent to 6.1 percent due to shrinkage in the labor force not to employment. The labor force participation rates slipped back to 62.8 percent a generational low, manufacturing jobs were flat and weekly hours and earnings were as expected.  

The Wall Street Journal reported that in the last three years the August non-farm payrolls number had been revised higher by an average of 90,000.

Heightened volatility after the NFP data lasted about 30 minutes with the euro flashing back and forth between 1.2947 and 1.2980 three times before subsiding to 1.2960 about 10:45 am. 

In the late morning and early afternoon the euro gradually slipped lower trading largely between 1.2950 and 1.2960 and closing at 1.2952.  With yesterday's low of 1.2920 nearby the downside remains vulnerable. 


Chart: Bloomberg

eur sept 5 min


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