FX Roundup: Dollar stabilises following non-farm payroll data

The dollar gained against a number of global currency crosses on Friday following the publication of a mixed US non-farm payroll data report.

The US added more jobs than forecast in March but the unemployment rate unexpectedly rose, according to the country's Labor Department.

Non-farm payrolls increased 215,000 last month, beating estimates of 205,000 jobs. The gains were driven by jobs in retail, construction and government.

However, manufacturing, mining and oil services suffered job losses amid struggles in those industries due to falling commodities prices and a slowdown in China's economy.

The unemployment rate rose to 5% in March from 4.9% the prior month, surprising analysts who had anticipated no change.

Average hourly earnings rose 2.3% year-on-year in March, compared to analysts' projections for the same rate of growth as the previous month at 2.2%.

"Another good month of hiring in the US will encourage further chatter in some corners of the Fed moving closer to hiking interest rates again, but signs of weakening economic growth mean policymakers are likely to be cautious and hold off until the global economy is showing greater vigour and the US economy more sparkle," said Chris Williamson, chief economist at Markit.

"Although the unemployment rate rose to 5.0%, up from an eight-year low of 4.9%, this was in part due to more people entering the labour market. At 63%, the participation rate was the highest since March 2014."

At 1544 BST, the pound was down 1.19% versus the greenback changing hands at $1.4189, while the euro slipped 0.13% changing hands at $1.1365. The dollar also rose against the Swiss franc by 0.07% changing hands at CHF0.9625, but fell 0.19% against the yen, changing hands at JPY112.36.

Robert Craig, private client investment manager at MB Capital, said, “Many expected a much weaker March, so for last month's payroll report to come in above consensus will have a largely positive effect on markets.

"This was by no means an historic non-farms payroll number but it's a solid one and that counts for a lot, all the more so given the uncertain global economic climate. Following the reassurance earlier in the week that the Fed will tread cautiously, hopefully the markets can enjoy these numbers without panicking about a rate rise.”

Commodity linked currencies shed overnight gains as oil and metal futures headed lower. The greenback rose 0.54% versus the Canadian dollar changing hands at CAD$1.3074. The Australian dollar fell 0.33% against its US counterpart exchanging at US$0.7650, while the New Zealand dollar also fell 0.64% exchanging at $0.6865.

In a note to clients, forex analysts at Societe Generale wrote: “Complacent with regard to the mixed bag of Chinese data, AUD/USD is overshooting its near-term fair value (copper, US rates) and is technically vulnerable.

“The odds are strongly oriented towards an increase in the implied volatility of cheap puts, and high intra-week volatility suggests a topside knock-in. We recommend buying an AUD/USD 1 month put with strike at 0.75 knocked-in at 0.78. This option is superior to a vanilla if activated during its first week.”

A plethora of other commodity currencies headed lower, particularly in Latin America, with the dollar gaining 0.57%, 1.33% and 0.37% against the Mexican, Colombian and Chilean pesos.