Forex Market Update: U.S. Dollar Pares Some of Its Losses after the Job data

The U.S. dollar fell to its two-month low against the Japanese currency during Asian trading hours on Friday, continuing its freefall from the previous session as investors remained wary of holding the currency ahead of the non-farm payrolls data.

However, the greenback pared some of its losses after better than expected nonfarm payrolls data for the month of May.

The report showed that 175,000 jobs were added in May compared to analysts’ expectation for 160,000 new additions.

At last check, the U.S. dollar was down 0.83% against the Japanese currency to trade at yen96.19, having plunged as low as 1.41% 95.63 yen, which was the lowest level since April, showed a data provided by Reuters. Earlier on Thursday, the U.S. dollar logged biggest one-day fall against the yen in last three years.

The nonfarm payrolls data is considered very crucial as the Fed’s current round of monetary easing is explicitly tied to the improvement in the U.S. labor market. Fed Chairman, Ben Bernanke, in his latest testimony to the Congress said that so long the U.S. job market remained weak, the $85 billion worth monthly bond purchase program would continue.

However, it will be interesting to see what would be the Fed’ stance on its monetary policy, given that the unemployment level rose to 7.6% from 7.5% in the previous month.

The Federal Reserve is scheduled to hold the next FOMC on June 18-19.

Before the job number were out, Valentin Marinov, Citi G10 currency strategist  said, “A strong number would highlight the risk of tapering as soon as September and would be dollar positive, but if we get a number around 100-120,000 then this could mean the Fed would rather wait,” Citi G10 currency strategist Valentin Marinov , adding that 93yen “was on the cards”, according to Reuters.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.