Dollar Posts Losses Against Majors

The dismal figures posted by the US Labor Department sent the dollar downward in currency markets and stifled speculation that the Fed will cut rates anytime soon. The employment data showed that US employers cut an unexpected 85,000 jobs in December after revised November figures showed job gains of 4,000. The greenback posted its biggest loss against six major currencies in almost two months. The dollar pulled back from a four month high vs. the Japanese yen and the euro was on its way to its biggest one day gain against the dollar since November. During the past few trading sessions the dollar had rallied on the expectation that December’s jobs figures would follow November’s trend  and the figures disappointed traders and investors. Samarjit Shankar of BNY Mellon in Boston said, “It was undoubtedly a disappointing number. It’s put a dent on rate hike expectations … and is a bit of a setback for investors who were looking for a relatively stable and smooth economic recovery. It’s put a dent on rate hike expectations … and is a bit of a setback for investors who were looking for a relatively stable and smooth economic recovery. The U.S. still has a weak labor market, and until that gets turned around, you are not going to have a sustainable recovery.”

Loonie Boosted by Rising Oil, Gold Prices

The Canadian dollar, affectionately called the ‘loonie,’ gained on the greenback as rising commodity prices bolstered the loonie. Canadian government bonds outperformed their US counterparts. Canadian bonds rose to 34 basis points for two year yields above similar US bonds. Higher oil and gold prices supported the loonie’s gains. For the week the Canadian dollar is up 1.9% against the US dollar. Against the euro the dollar fell as much as 0.9% trading at $1.4409.

Dollar Decline May be Short Lived

Some analysts expect the dollar’s decline to be short lived. Vassili Serebriakov of Wells Fargo stated, “The dollar has shown resilience. There were some mitigating factors. Should the damage to the dollar be limited in the aftermath of the report, that would be a positive sign for the greenback.”