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US dollar plummets as September job growth slows

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US dollar plummets as September job growth slows

The US dollar fell to fresh lows as employment growth slowed in September, according to the Labor Department.

The highly awaited jobs report revealed only 148,000 jobs were created last month, well shy of expectations for 180,000. This brings the three-month average to 143,000. The unemployment rate unexpectedly dropped another 0.1 percentage point to 7.2 percent, as labour force participation remained at a 35-year low.

The greenback declined more than 0.6 percent to 79.2 against a basket of its major peers, as market participants braced for a prolonged bout of federal stimulus. Weaker than forecasted job growth and the recent budget impasse, which is expected to have trimmed at least 0.6 percent from GDP, have negated expectations the Federal Reserve will begin to taper record stimulus this year. The Fed’s balance sheet has swelled to more than $3.6 trillion, a 400 percent increase since the financial crisis began. The third round of quantitative easing, dubbed QE3, has injected more than $800 billion into the markets since September 2012.

The US dollar fell 20 pips against its northern counterpart, the loonie, after Statistics Canada reported a boost in retail sales in August. The USDCAD remains firmly capped below the 1.03 handle ahead of the Bank of Canada’s rate decision, which is scheduled for Wednesday.

In Europe, the dollar fell more than 0.8 percent against the common currency, which had no data to report. The EURUSD is testing 1.38 for the first time since November 2011. Elsewhere in Europe the British pound soared 100 pips against the dollar, breaking three resistance levels in the process. The Office for National Statistics reported better than expected public sector net borrowing.

The Australian dollar continued its upward momentum, advancing more than 50 pips to break the 0.97 barrier for the first time in five months. The Aussie has soared more than 1.6 percent against the greenback over the past five sessions as the down-under currency sets its sights on a broad correction

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