Forexpros Weekly Wrap-Up 05 October 2012

Closing the Week with Forexpros

by Forexpros Staff

The dollar traded mixed to higher against most major currencies on Friday, regaining strength after softening when U.S. unemployment rates defied expectations and fell in September.

The U.S. unemployment rate fell to 7.8% percent in September from 8.1% in August, the Bureau of Labor Statistics reported earlier Friday.  Markets were expecting the rate to rise to 8.2%.

Employers added a net 114,000 nonfarm payrolls in September, while households reported that total employment rose by 873,000 in September following three months of little change.

Analysts were expecting the economy to pick up a net 113,000 nonfarm payrolls.

The number of unemployed Americans stands at 12.1 million, the fewest since January 2009.

More workers took on part-time jobs last month, which accounted for the drop in the headline unemployment rate.

The dollar weakened initially, as a falling headline inflation rate sparked a risk-on trading session that sent stocks and higher-yielding currencies rising at the greenback’s expense.

While the number of number of new jobs rose, the number was not strong enough to suggest fundamental improvements in the labor market are taking place, which gave the dollar support.

The dollar was up against the yen, with USD/JPY trading up 0.26% at 78.68, and down against the Swiss franc, with USD/CHF trading down 0.05% at 0.9300.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD trading down 0.13% at 0.9791, AUD/USD down 0.68% at 1.0170 and NZD/USD trading down 0.59% at 0.8169.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.05% at 79.46.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.30% at 1.6143.

The pound held steady against the U.S. dollar on Friday, trading close to a one-week high as risk sentiment was boosted by upbeat U.S. employment data, while invesors continued to focus on developments in Spain and in Greece.

GBP/USD hit 1.6217 during U.S. morning trade, the pair’s highest since September 28; the pair subsequently consolidated at 1.6188, dipping 0.01%.   The pair is likely to find support at 1.6118, the low of September 30 and resistance at 1.6272, the high of September 28.

The euro rose to a two-and-a-half week high against the U.S. dollar on Friday inspite of lingering euro zone debt worries.

EUR/USD hit 1.3070 during U.S. morning trade, the pair’s highest since September 19; the pair subsequently consolidated at 1.3069, climbing 0.42%.  The pair was likely to find support at 1.2994, the session low and resistance at 1.3114, the high of September 18.

When U.S. trading on Friday, EUR/USD was up 0.12% at 1.3032.

Gold

Gold prices fell in U.S. trading on Friday as investors sold the precious metal for profits, shrugging off solid unemployment data that sent gold’s traditional hedge, the dollar, dipping.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.94% at USD1,779.85 a troy ounce, up from a session low of USD1,774.95 and down from a high of USD1,798.05 a troy ounce.

Gold futures were likely to test support at USD1,774.95 a troy ounce, the earlier low, and resistance at USD1,798.05, the earlier high.

Gold has risen in recent sessions due to loose monetary policies around the world, in the U.S. especially.

The U.S. Federal Reserve is currently running a third round of quantitative easing, a monetary stimulus tool that sees the U.S. central bank buy USD40 billion in mortgage-backed securities a month on an open-ended basis to spur recovery.  Such policy tools weaken the greenback and make gold an attractive hedge.

Elsewhere on the Comex, silver for December delivery was down 1.78% and trading at USD34.475 a troy ounce, while copper for December delivery was down 0.56% and trading at USD3.765 a pound.

Oil

Crude oil futures fell on Friday amid profit-taking, as investors shrugged off the surprisingly strong U.S. employment data.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at USD89.46 a barrel on Friday, down 2.45%, off from a session high of USD91.65 and up from an earlier session low of USD89.03.

Oil ignored otherwise bullish data.

Oil gained when the news broke but later fell amid profit-taking on sentiment that despite the improvement, not enough new jobs were created last month.  More workers took on part-time jobs last month, which accounted for the drop in the headline unemployment rate.

On the ICE Futures Exchange, Brent oil futures for November delivery were up 2.94% and trading at USD111.34 a barrel, up USD21.88 from its U.S. counterpart.

Stocks

U.S. stocks ended mixed on Friday, wiping out earlier gains after investors applauded better-than-expected jobs data and later viewed the numbers with skepticism.

At the close of U.S. trading, the Dow Jones Industrial Average rose 0.26%, the S&P 500 index was down 0.03%, while the Nasdaq Composite index was down 0.42%.

Leading Dow Jones Industrial Average performers included Home Depot, up 2.35%, Boeing, up 1.36%, and DuPont, up 1.23%.

The Dow Jones Industrial Average’s worst performers included Hewlett-Packard, down 1.41%, Bank AT&T, down 1.28%, and Bank of America, down 0.96%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 1.83%, France’s CAC 40 rose 1.64%, while Germany’s DAX 30 finished up 1.27%. Meanwhile, in the U.K. the FTSE 100 rose 0.74%.