Job Losses Not as Bad as Projected

The Dollar rose Friday as data released by the US showed that job losses were not as bad as had been projected. Forex traders had positioned themselves for a dismal non-farm payroll report. A report released earlier in the week had stated that job losses had reached 693,000. Many of those short trades were squeezed when the government reported a figure of 524,000, slightly better than the market’s revised 550,000 forecast.

Dollar ‘Dodges Bullet’

Nick Bennenbroek, head of currency strategy, at Wells Fargo in New York said, “The dollar has dodged an economic bullet. Even though the report was generally discouraging, the headline payrolls decline was broadly as forecast. And perhaps most significantly for the dollar, we don’t think today’s report will accelerate further monetary easing from the Federal Reserve.”

US loses 1.9 Million Jobs

Although the figures in the job report were not as bad as predicted many analysts and Forex traders believe that there is plenty of bad news for the US and its currency. The 7.2 percent unemployment rate was the highest in 16 years and the US has lost 1.9 million in the last four months. Total job losses for 2008 were 2.6 million, the largest decline in 63 years. Kathy Lien, currency researcher at GFT Forex, stated, “There was nothing good in the report, The U.S. is in recession and in previous recessions, job cuts have lasted for at least 15 months.”

Many Forex traders have observed that the US has suffered 12 straight months of job losses. Despite the figures the dollar is still holding its own on currency markets and Forex traders expect this to continue in the immediate future.