NEW YORK—The euro dropped to a two-year low against the dollar after a disappointing U.S. jobs report and doubts about Europe's plan to address its debt crisis drove investors to the greenback.
On Friday, the U.S. nonfarm payrolls report showed 80,000 jobs were added in June, lower than the 100,000 average forecast by economists polled by Dow Jones. The unemployment rate was unchanged at 8.2%.
Negative reports from Europe further undermined optimism from last week's euro summit. A central euro-area bank supervisor, the centerpiece of the agreement, won't be in place until the second half of 2013, a senior European Union official said.
"The sentiment has worn off from the euro-zone summit, and I think we're kind of left with piecemeal solutions that don't solve the crisis," said Mark McCormick, a currency strategist at Brown Brothers Harriman in New York.
In late-afternoon trading, the euro sank to $1.2267, its lowest level since July 2010. The euro was down 1% from $1.2392 late Thursday.
The euro has given up all of its post-summit gains in the past three days, dropping nearly 3%. A week ago, the common currency had neared $1.27.
The common currency also plummeted to a four-year low against the U.K. pound. The euro traded at 0.7929 pounds, compared with 0.7981 pounds late Thursday.
The euro was already under pressure after the European Central Bank slashed interest rates on Thursday, along with central bank actions from China, England, Denmark and Kenya. The moves signaled central bank concern about the state of the global economy.
Across the board, investors sold riskier currencies, including the Australian and New Zealand dollar, and bought currencies perceived as safer, such as the U.S. dollar and the yen. The Australian dollar fell to $1.0188 from $1.0287 late Thursday, while the pound dipped to $1.5471 from $1.5525.
The dollar gathered strength as investors doubted that the U.S. payroll number, while below expectations, was weak enough to spark another round of bond buying from the Federal Reserve.
"I don't think the Fed's in a hurry to start another round of quantitative easing, given it just started 'Operation Twist,'" said Richard Franulovich, senior currency strategist at Westpac Banking Corp. in New York, referring to the Fed's effort in June to bring down long-term interest rates by buying longer-maturity bonds.
The yen rose against the dollar and the euro, buoyed by its safe-harbor appeal. The dollar recently traded at ¥79.63 versus ¥79.92 late Thursday, while the euro changed hands at ¥97.782 from ¥99.04.
The ICE Dollar Index, which tracks the greenback against a basket of currencies, recently was at 83.35, up 0.6%.
No comments:
Post a Comment