Concerns about Fed’s QE3 Resurges as NFP Underperforms

By TraderVox.com

Tradervox (Dublin) – Most bourses remained closed for Good Friday holiday as the non-farm payroll data was released indicating that the job market underperformed taking only 120,000 employees in March which is the least uptake in Five months. This is against an expectation of an increase of about 205,000 jobs. This has brought back concerns that the Fed may still consider the third round of quantitative easing. According to March 13 meeting minutes released this week; member of the Federal Reserve indicated that change in the current trend would push some members to vote for the quantitative easing program.

The dollar declined against the euro and the yen after this report was released on Friday. However, the US unemployment fell to 8.2 percent, which is the lowest since Jan. 2009. The euro had fallen against the dollar and the yen, but later gained against the dollar after the report. The 17-nation currency is set for a weekly drop against yen as concerns about the regions sovereign debt crisis reemerged in Spain debt auction.

According to Sebastien Galy, a Senior Foreign Exchange strategist at Societe Generale SA in New York has indicated that the USDJPY pair is expected to drop as traders looking for stimulus argument cash in on the current NFP data. Another analyst, Ray Attrill who is a Senior Currency strategist at BNP Paribas SA in New York said that this might not be a green light for the Fed Chairman Ben S. Bernanke to announce a third round of stimulus package but it certainly sets the ground on which some FOMC members will be pushing for it.

After the news of the lower than expected non-farm payroll data hit the market, the dollar declined against the yen by 1.1 percent to 81.50 at the start of the day in New York, which is the lowest it has been since March 8. The greenback fell against the euro by 0.2 percent to exchange at $1.3096 per euro. The Canadian dollar pared its weekly gain by falling 0.5 percent against the dollar to trade at 99.77 cents per US dollar.

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