Sterling To US Dollar Rate Drops Following Weak US Non-Farm Payrolls Data

Published: Tuesday, 10 April 2012 09:00 BST - Written by Toni Johnson

STORY LINK Sterling To US Dollar Rate Drops Following Weak US Non-Farm Payrolls Data

The Pound To US Dollar exchange rate is 1.5904.

Last Friday’s highly disappointing US Non Farm Payrolls data for March, which showed that only 120,000 new jobs had been created in the world’s largest economy last month, has informed price action in the global markets at the start of this week’s session. For the three months preceding the March American labour market data, the NFP number had shown that over 200,000 new positions had been generated, so Friday’s release has caused renewed fears from the investment community that the global economy may struggle to avoid a double dip recession in 2012.

The strengthening of last week’s ‘risk off’ trading environment, which was initially triggered by widening yields on Spanish and Italian government bonds, has caused the usual safe haven currencies to garner support so far this week, meaning that the Yen, Swiss Franc and US Dollar have all performed creditably. Support for the Greenback has seen the GBP USD exchange rate pull back from the 1.6000 level which it breached in the early part of last week. If institutional investors continue to shun investments with a higher risk tariff during this week’s session, then a return to the mid1.50s could be on the cards, sooner rather than later.

Elsewhere, Chinese CPI inflation data, released in the early hours of yesterday morning, showed that the rate of price rises in the giant Asian economy was higher than analysts had been anticipating last month, suggesting that Chinese policy-makers have limited scope to further ease the country’s domestic economic policy. This could cause economic growth in China, which has shown signs of slowing in recent months, to drop-off as the year progresses, eliciting further support for the US Dollar.

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