By TraderVox.com
Tradervox.com (Dublin) – The US dollar has weakened against most major currencies despite a report showing US employers added more workers in July than it has been forecasted. This has boosted risk appetite in the market making the US dollar unfavorable. The greenback weakened as report from Labor Department in Washington showed that unemployment rate increased to 8.3 percent in the same period. The Federal Reserve failed to give a clear signal on when it would embark on a third round of asset purchases, but indicated that it would act out of necessity. The growing unemployment might force the FOMC to act sooner rather than later. Further, the dollar declined against the euro after German Chancellor Angela Merkel’s coalition members said that they will not oppose European Central Bank’s plans to buy government bonds.
According to Greg Anderson of Citigroup Inc in New York, the headline is enticing but the resulting details are not so supportive in regard to Fed’s decision. He said that the market is now looking at what Europe will do in relation to Spain, Greece and Italy. The Labor Department data showed that US employers added 163,000 jobs in the market after a revised rise of 64,000 in June. This is greater than market expectation of 100,000 jobs. However, the unemployment rose to three months high of 8.3 percent from the previous reading of 8.2 percent.
With these mixed results in the labor market, investors seem to stick to their speculation of Fed making a third round of quantitative easing soon. According to Eric Viloria who is a Senior Currency Strategist in New York at Gain Capital Group LLC, the Labor Department data is not strong enough to change market sentiments on quantitative easing. The US dollar fell by 1.2 percent against the euro to trade at $1.2324 at the start of trading in New York but appreciated against the Yen by 0.5 percent to trade at 78.63 yen per dollar.
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