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Forex News – Weak US employment report hurts dollar

XM Markets UUIIFXBR
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The US economy added 126k jobs in March, which is less than the consensus estimate of 245k. In a sign of further weakness fpr Q1 GDP, the previous month’s figure was revised lower to 264k from the initial estimate of 295k. The job figures for January and February were revised down by a combined total of 69,000 jobs.

The weaker than expected economic figures were attributed to the severe winter weather across the US in the first few months of 2015, as well as slowdown in factory output and sluggish construction activity. The strong dollar is also said to be weighing on the US economy.

This latest data puts into question again the timing of an interest rate rise by the US Fed, which gives the Fed further scope in keeping rates at their current rate until at least September.

The unemployment rate was unchanged at 5.5% as expected. However, the labour force participation rate dropped to 62.7% in March, which was the lowest since 1978 and is down from 62.8% in February.

Average earnings rose to 0.3% year-on-year in March, compared to 0.2% in February. This gives a year-on-year rise of 2.1%.

Against the euro, the dollar fell sharply following the release of the data. The euro rose to a high of 1.10263 on Friday but later settled to around 1.097. Looking at the dollar index, the trade-weighted average value of the dollar dropped to 96.71 at the close of Friday’s session. Against other currencies, the dollar closed at 118.917 against the yen, at 0.76285 against the Australian dollar, and at 1.49136 against the Pound.

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