Dollar rises after hitting record lows
NEW YORK - The dollar rebounded from record lows triggered by a surprise contraction in US payrolls for a second straight month as attention shifted to moves by the Federal Reserve to ease tight liquidity conditions.
Profit-taking following three days of euro’s successive rallies to historic peaks against the dollar, giving the US currency some respite in mid-morning trade.
Analysts said the euro’s sharp rally made the currency ”expensive” and paved the way for a minor reversal against the dollar.
The Fed said it would hold a series of term repurchase operations totaling $100 billion to ease liquidity pressures in stressed financial markets. This was in addition to an earlier announcement that it would increase amounts in its Term Auction Facility auctions this month to $50 billion each, a rise of $20 billion.
“The dollar was clearly oversold this morning even before the payrolls report and as soon as that came we started to see flows from Europe putting a cap on euro gains at around 1.5450,” said Gregory Salvaggio, a currency trader at Tempus Consulting in Washington D.C.
“That combined with the Fed’s announcement on extra repo lines, gave the market a bit of a breather. It seems the central bank is at least aggressively monitoring liquidity. It’s no surprise that stocks started to turnaround and the dollar bounced a bit.”
The euro surged to $1.5459, according to Reuters data, as investors took fright at news that U.S. employers cut payrolls again in February.
The 63,000 jobs decline was the biggest monthly drop in nearly five years, the Labour Department said. Economists surveyed by Reuters had forecast 25,000 jobs would be added to payrolls last month.
In New York morning session, the euro traded around $1.5350 down 0.2 per cent on the day. The New York Board of Trade’s dollar index, which tracks the dollar’s performance against the basket of currencies, slumped to an all-time low of 72.462. It later rebounded to around 72.988.
Weak jobs data: The greenback also slumped to historic troughs against the Swiss franc at 1.0136 Swiss francs, before recovering to trade up 0.2 per cent at 1.0258 Swiss francs.
Against the Japanese yen, it dropped to its lowest level in eight years at 101.44, before regaining its poise to trade up 0.1 per cent at 102.70 yen.