Euro Reaches Two-Week High

On Friday, the greenback reached a two-week high against the Japanese yen. It rose to 78.87 against the Japanese currency before falling back to 78.65. This was a 0.24 percent gain for the day. The United States Labor Department released their data for the month of September. With unemployment at four-year lows, the Forex and stock markets rose for a brief period of time.

The unemployment level in the United States is currently at 7.8 percent. In September, the economy added 114,000 non-farm jobs. After a summer of bailout fears in Europe, the news was welcomed by investors and is a sign that the world’s top economy is gradually recovering. Despite the growth in employment, most analysts believe that the United States Federal Reserve will continue their fiscal easing measures. Wary about losing any gains, the Fed is going to be cautious about ending fiscal easing measures that currently seem to be working.

Employment growth in the United States was tempered by the proportion of part-time jobs to full-time jobs. Many of the new jobs available only offer part-time hours. When calculated into the employment report, part-time workers are considered employed even though they are underemployed. Factory jobs also lost traction according to the unemployment report. In September, factories in the United States lost 16,000 jobs. Over the course of three months, factories have lost a total of 21,000 jobs.

European Gains

Right after the report was released, the euro reached a two-week high of $1.3071. By the end of Friday’s trading session, it fell back to $1.3017. Overall, the euro has gained 1.33 percent for the week. Resistance is seen at $1.31. Some analysts believe that this level will be a temporary barrier. When the Eurozone’s currency approaches $1.31, many investors have sold off their stores of the currency for respectable profits. If the currency can breach $1.31, it will take the euro back to its 2011 highs.

Continued progress with the euro will be hindered by continuing concerns over impending Spanish bailout. Despite rumors to the contrary, Spain has yet to request bailout money through official channels. Earlier this week, reports indicated that the Spanish government may ask for help as early as this weekend. As the weekend draws to a close, it becomes more apparent that a bailout deal is not going to be happening yet. The longer Spain waits to request the aid package, the more likely the deal will cost more.

Versus the yen, the Eurozone’s currency reached a two week high of 102.80 during the trading session. By the end of the day, it dropped off to 102.46 yen or a gain of 0.30 percent. The fluctuations in the yen are attributed to impending measures by the Bank of Japan. Investors are worried that Japanese officials may choose to intervene in the marketplace. This week, the Bank of Japan chose to stay on the same course with their fiscal easing policies.

The Dollar Index Falls

For the first time in three weeks, the Dollar Index fell. After payroll data was released, the United States dollar rose against a basket of 16 other currencies. It briefly toughed 79.103 on Friday before it returned to 79.336 for a 0.8 percent gain for the week.

The Federal Reserve Bank is also expected to issue it Beige Book next week. This book is a survey of regional business and is handed out as the Fed prepares for their next policy meeting on October 23rd and 24th. Prior to this meeting, the Beige Book will be released on October 10 to give policy makers in the United States anecdotal evidence about the performance of the economy.

Versus the euro, the dollar fell 1.4 percent to $1.3045. Last week, it gained 1.2 percent. The Japanese yen also fell against the greenback to 78.67 or 0.9 percent. Futures traders are currently betting that the euro will fall against the United States dollar net shorts were at 50.265 on October 2. The previous week saw net shorts at 50.238. The record number for these wagers was 214,418 on June 8.

South African Rand Underperforms

Friday’s trading session saw the rand fall to 8.8465 versus the dollar. This marks a loss of 5.3 percent for the week. During the session, South Africa’s currency managed to reach its weakest level since April of 2009. Strikes in the mining and transportation industries have fueled speculation that the economy in South Africa may be preparing to take a tumble.

Meanwhile, the Australian dollar managed to decline versus the majority of its peers. It fell 1.8 percent to $1.0187 against the greenback. At one point, it was at a low of $1.0152. This marks the weakest level for the Australian dollar since July 13. At the same time, it also dropped 0.9 percent to reach 80.14 yen. Australia’s falling currency has taken a hit since the Reserve Bank of Australia dropped the interest rate to 3.25 percent. The island nation is also plagued by its largest trading deficit since 2008.

The New Zealand dollar fell against the United States dollar for its first week since August. China released data from non-manufacturing industries recently that showed weaker than expected growth. The global superpower posted its slowest growth pace since March 2011. Since the nation is New Zealand’s second biggest trade partner, slowed growth prospects have a large impact on investor confidence in the New Zealand kiwi. Overall, the kiwi fell 1.5 percent versus the United States dollar. After briefly touching 81.53 cents, it bounced back to 81.80 cents versus the greenback. This is the lowest level for New Zealand’s currency since September 11.
Asian Currencies Rise

In India, the rupee posted its fifth weekly gain. This is the currency’s longest winning streak since February of this year. At the same time, the won in South Korea rose to an 11-month high. The Philippine peso rose 0.7 percent to 41.427 while the baht in Thailand rose 0.8 percent to reach 30.56. In Malaysia, the ringgit advanced 0.3 percent to 3.0530 versus the greenback.