Forex - Weekly outlook: August 5 - 9
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The dollar ended Friday’s session mostly lower against its major counterparts after weaker-than-forecast U.S. jobs data dampened expectations that the Federal Reserve will start to unwind its stimulus program by the year's end.
The Department of Labor said the U.S. economy added 162,000 jobs in July, less than the 184,000 increase forecast by economists. June's figure was revised down to 188,000 from a previously reported 195,000.
The unemployment rate ticked down to 7.4% from 7.6% in June, due in part to more people leaving the labor force.
The data came amid growing uncertainty over the future of the U.S. central bank’s stimulus program, after the Fed said on Wednesday that it would keep buying USD85 billion a month in mortgage and Treasury securities and gave no hint of plans to taper its bond-buying program.
The euro rose to a session high of 1.3294 against the dollar, before settling at 1.3280, up 0.55% for the day and little changed for the week.
The euro weakened against the dollar on Thursday after the European Central Bank maintained a dovish stance on interest rates.
Speaking at the bank’s post policy meeting press conference, ECB President Mario Draghi said the central bank’s monetary policy will remain accommodative “for an extended period of time”.
Draghi’s comments came after the ECB held its benchmark interest rate at a record low 0.50% in August, in line with expectations.
The dollar lost more than 1% against the pound on Friday, with GBP/USD rising to a session high of 1.5308, before settling at 1.5292, up 1.14% for the day and nearly flat for the week.
The Bank of England also left its benchmark interest rate unchanged at 0.5% on Thursday and kept the size of its asset purchase program unchanged at GBP375 billion, at Governor Mark Carney's second meeting at the head of the central bank.
The dollar fell to a low of 98.67 against the yen following the disappointing jobs report, before settling at 98.96, down 0.59% for the day. Despite Friday’s losses, the greenback still ended the week with a gain of 0.66%.
Elsewhere, the greenback was higher against the commodity-linked Canadian, Australian and New Zealand dollars after the release of downbeat U.S. nonfarm payrolls data painted a mixed picture of the strength of the U.S. job market's recovery.
In the week ahead, investors will be looking ahead to a flurry of key U.S. economic data to further gauge the strength of the U.S. economy and the need for stimulus.
Policy meetings by the Reserve Bank of Australia and the Bank of Japan will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
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