FX round-up: Euro shorters close their positions

Date: Monday 05 Jul 2010

The value of the dollar, as measured by the dollar index, fell for the fourth week in a row, with the greenback dipping again on Friday after disappointing US jobs data.

Though the June unemployment rate unexpectedly fell to 9.5% from 9.7% in May, versus expectations of a rise to 9.8%, non-farm payrolls fell by 125,000 in June, slightly more than expected.

Of more concern was the private sector employment data. Though private sector employers took on 83,000 new employees in June, this was well short of expectations.

The dollar index, which measures the US currency’s value against a basket of six currencies, fell to its lowest level in just under two months following the release of the US jobs data, though it finished the day above its worst level, at 84.41, compared to 84.68 in late New York trading the day before.

The euro temporarily rose above $1.26 against the greenback before ebbing to $1.2553, up from $1.2486 on Thursday afternoon. Traders attributed the dollar’s swoon against the euro to the closing of short positions in the European common currency rather than any fundamental change in view on the respective values of the euro and the dollar.

Over in the Asia Pacific region the Aussie dollar had a good day on Asian markets after the government reached agreement with three of the big mining companies on a watered down version of the proposed resources super tax.

The Aussie dollar rose about 85 cents in trading on Asian markets but gave up those gains in New York trading, sliding to 84.41 US cents.

Earlier in the day in London, sterling had hit a two-month high against the US dollar, rising to $1.5230, before sliding back below $1.52 in the afternoon session.

The UK currency continues to enjoy the support of markets encouraged by the tough words on spending cuts being spoken by the coalition government.

The pound fared less well against the euro. The value of the euro rose to 82.96p, its highest point in more than a week and more than 2p above the level seen at the start of the week. 

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