Rising US unemployment sees the greenback yo-yo amid QE confusion
Friday 04 January 2013
Rising United States unemployment triggered a see-saw day for the dollar yesterday amid mixed signals over the Federal Reserve's plans to pump billions more into the economy this year.
The Fed launched so-called QE3 last September to cut jobless numbers, with the aim of buying up $85bn (£52bn) of assets a month until unemployment drops to 6.5 per cent.
Minutes of its latest policy meeting initially sparked a furious reaction in markets after revealing that "several" rate-setters wanted to slow or stop quantitative easing well before the end of this year.
The hawkish tone sent the greenback soaring to its highest for two and a half years against the yen, as Japan's central bank is expected to pump more stimulus into the economy. The dollar also traded close to the key $1.60 level against the pound and the $1.30 mark against the euro.
But the currency's gains were later unwound as non-farm jobs data showed a higher than previously thought unemployment rate of 7.8 per cent for November and December. This puts the Fed further away from its 6.5 per cent target despite employers adding 155,000 jobs over the month. Economists estimate the US has to create more than 200,000 jobs a month to make a serious dent in the unemployment rate.
IG Index analyst David Madden added: "It could be that the Fed spoke too soon about turning off the printing press."
Peter O'Flanagan, head of foreign exchange trading at Clear Currency, said: "The clear driver for QE is going to be the unemployment rate."
US workers are also seeing average wages rising ahead of inflation, unlike the UK. The figures showed hourly wages up 2.1 per cent in December compared with a year earlier. Inflation rose 1.8 per cent over the same period.
- 1 Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 5 The enemy within: People who hear voices in their heads are being encouraged to talk back
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Howard 'Mr Nice' Marks reveals he has inoperable cancer: 'I've had an incredible life'
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...