Dollar weak post non-farm payrolls

The US dollar has come under renewed pressure and dropped
against its counterparts on Friday after a dismal jobs report. The
US non-farm payroll numbers came in at 74,000 against an
expectation of just under 200,000. Concerns have again turned
towards the pace of the tapering program, which the Fed has been
proved right in being cautious and just trimming it by 10bn a
month. However, US Fed
member Flockhart is to speak today ahead of Ben Bernanke on
Thursday and markets will keep a close eye on further signals from
the Federal reserve on the direction and pace of tapering of asset
backed securities. Moreover, earnings reports from major firms are
due for release today so stocks may be in for some volatility and
the strength of the economic recovery of the US will be keenly
anticipated. The Federal budget balance is out later today.

 The euro took its cues from the non-farm payroll numbers
and surged to 1.3660 against the greenback. Mario Draghi addressed
the markets on behalf of the ECB in what was a fairly expected
dovish though reassuring speech, where he stated that although
inflation is low and far from desired in the Eurozone, interest
rates were to be on hold for the near future. There was also a hint
that should the Eurozone slowdown in terms of economic growth
another round of LTRO easing could be on the way as he reasserted
that negative interest rates are not being looked at by the ECB.
The market now looks to Friday’s German Constitutional court ruling
as a crucial point of guidance for future Eurozone recovery
efforts. In terms of economic data, industrial production from
Italy and French bond auctions are due later today though markets
will await Eurozone
CPI data tomorrow for direction.

 In the UK, figures for the Industrial and manufacturing
production for December came out less than expected and saw cable
drop sharply in the morning session. However, post the non-farm
payroll data GBP/USD surged to 1.65. It is a fairly quiet day for
UK economic data as markets look ahead to inflation numbers on
Tuesday and Retail Sales on Friday.

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