The surprisingly low reading of March nonfarm payroll resulted in dollar’s biggest fall on Friday in almost two weeks. The euro climbed 1 percent against the dollar in thin trade on Friday after the weaker-than-expected jobs report. The dollar steadied, the ICE US Dollar Index, a measure of the dollar’s strength against six major currencies, was flat at 96.53 today. The Labor Department data showed US employers added only 126 thousand jobs in March against an expected increase of 240 thousand. The lower payroll in March came after above 200 thousand readings for twelve consecutive months, which indicated improved labor market conditions and allowed the Fed to project improved growth outlook and plan for normalizing the monetary policy. The weak nonfarm payroll strengthened the argument for the case that the Fed may decide to delay the interest rate hike. The initially expected increase of interest rates in June looked less certain after a string of disappointing economic reports, particularly the drop in durable goods orders in February. Now coming economic reports will be watched more closely for indications that the US economy is still on firm recovery path and recent disappointing indicators were results of transitory factors such as bad weather, supply delays and disruption due to labor disputes on west coast ports. Weaker jobs data heightened also investors’ concerns about the coming corporate reporting season as investors are worried that the earnings are expected to decline for the next two quarters. Stock index futures are falling today, futures for the Dow Jones Industrial Average , the S&P 500 and the Nasdaq-100 index fell all 0.7% , indicating a lower opening for US stock markets later today. The outcome for the trading day is not certain though as expectations for rate hike delays may support more buying on dips and push the market higher. Today at 15:00 CET March ISM Non-manufacturing Index and Federal Reserve’s Labor Market Condition’s Index will be published in US. The tentative outlook is negative for the dollar.
The Nikkei closed 0.2 percent lower as disappointing US jobs data weighed on investor sentiment. The dollar edged up about 0.1 percent against the yen. Exporters were weak, with Toyota Motor Corp falling 0.8 percent and Nissan Motor Co declining 1.4 percent. The losses were capped by improved earnings outlook for Japanese companies as weaker yen, as a result of bond buying program started by the Bank of Japan since October, boosts overseas earnings for export oriented Japanese economy. Next month Japanese companies will release forecasts for the current fiscal year when they report their full-year earnings for the year ended March 2015.
European markets are closed for Easter holiday today. Euro inched higher against the dollar after climbing for third straight week on Friday. After an informal meeting on Sunday between Christine Lagarde, the International Monetary Fund’s managing director and Yanis Varoufakis, minister of finance for Greece, an IMF statement reported that Greece will make a €460 million ($505 million) repayment to the IMF on Thursday.
Oil prices rebounded on Monday as analysts estimate that it will take months for Iran to increase oil output and exports after a framework nuclear deal was announced and Saudi Arabia raised its official crude oil selling price for Asian buyers for May over the weekend.
Gold prices jumped as disappointing jobs data indicated worsened equities outlook.