FOREX: Euro-Dollar drops to new 4-year low after US Employment report

By CountingPips.com The European common currency has traded sharply lower against the U.S. dollar today in the forex market following the release of the U.S. government nonfarm payroll report. The euro-dollar currency pair (EUR/USD) touched under the 1.2000 exchange rate for the first time since late March of 2006 today and has established a fresh four-year low. The EUR/USD had previously touched a low of 1.2110 on June 1st before rallying back to a high of 1.2326 in yesterday’s trading. Today’s trading action saw the pair open the day at 1.2178 and move to a high of 1.2214 when risk appetite turned bearish and propelled the EUR/USD sharply downwards to new lows. Today’s release of the market-moving U.S. nonfarm payrolls report showed that the U.S. economy added 431,000 workers in May, according to the Department of Labor. This increase of employment is usually cause for rejoicing after a deep recession but the overwhelming majority (411,000) of new hires were added to the government payroll due to an increase in census employment. The total jobs number gained failed to meet market forecasts seeking 536,000 new jobs and is seen as a disappointment due to just 41,000 new private-sector employees being added for the month. Also adding to the sour economic mood was news from Europe that an “informal” visit by the IMF to Hungary had taken place to assess the country’s fiscal health in the past few days. Following that was a warning by the new Hungarian government that the country’s finances were in a “grave situation” that was hidden by the previous administration and that the country could fall into a Greece-like crisis. More details are scheduled to be released this weekend by the new government. (More from an FT article) The US stock markets, meanwhile, are feeling the effects of the risk aversion in the markets today with the Dow Jones lower by over a 200 points, the Nasdaq decreasing approximately 45 points and the S&P 500 down by over 20 points at time of writing. Oil has fallen lower by $2.92 to trade at the $71.69 per barrel level while gold has gained by $4.80 to level at $1,213.10 per ounce at time of writing. The U.S. dollar, acting as a safe haven, has been sharply higher in the currency markets today. The American currency has risen versus the euro, British pound, Swiss franc, Canadian dollar, Australian dollar and the New Zealand dollar while falling against the (other major currency safe haven) Japanese yen. EUR/USD 1-Hour Chart – The Euro started the day off trending higher against the US dollar in the forex markets but fell sharply lower as risk aversion set in and a disappointing US jobs report was released. The EUR/USD has fallen to trade below the 1.2000 exchange

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FOREX: Euro-Dollar drops to new 4-year low after US Employment report

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