US Jobless figures reach 4 year low as prospect of Spanish bailout draws closer

Tom Tong12/Oct/2012Currency Updates

USD

The dollar fell versus most major currencies as speculation that Europe’s debt crisis will ease and a report showing that US unemployment benefit applications fell spurred appetite for higher yielding assets. U.S. Labour Department figures showed applications for jobless benefits in the U.S. decreased 30,000 to total 339,000 in the week ended Oct. 6, the fewest since February 2008. We saw the dollar weaken 0.4 percent against the euro.

The rand appreciated for a third day against the dollar amid signs labour unrest that shut gold and platinum mines and spread to the transport industry is easing. The currency climbed 0.8 percent. It had weakened 6 percent in the four days through Oct. 8 amid the turmoil.

EUR

Standard & Poor’s downgraded Spain on Wednesday to one level above junk therefore the euro strengthened as speculation grew that Spain will seek a bailout and demand increased at an Italian bond sale. This meant the euro rose against the dollar for the first time in four days on Thursday. However, uncertainty over when Spain would seek a bailout and fresh concerns over Greece could limit gains in the euro. A request for aid by Spain is widely seen as positive for the euro because it would remove a layer of uncertainty and activate the European Central Bank’s bond-buying program aimed at easing pressure on troubled economies.

GBP

The pound strengthened for a second day against the dollar. Even though there was no data released, the pound was able to rally due to the positive reaction to the US weekly jobless claims report. Things to look out for today are any comments from government officials and MPC members about the effectiveness of the Bank of England monetary policy which could set the tone for the pound trading during the London session.

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Written by Tom Tong

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