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EUR/USD Update – Jobs Report Gives Bernanke Reason to Stick With Tapering



Good day forex traders and readers.

As early week trading starts, we currently see the EUR/USD ranging without a clear direction.

The US Non-Farm Payroll would no doubt give investors a cause for worries as speculations on when and how quantitative easing tapering would be done continue. On the other hand, the better than expected US Non-Farm Payroll would also provide a boost to sentiments regarding the US.

Read more about the US Non-Farm Payroll below from Bloomberg.

Employers added more jobs in June than forecast as the U.S. economy shook off the effects of fiscal restraint, giving Federal Reserve Chairman Ben S. Bernanke reason to stick to his plan of slowing record monetary stimulus this year.

Payrolls rose by 195,000 workers for a second month, the Labor Department reported yesterday in Washington, exceeding the 165,000 median forecast of economists in a Bloomberg survey. The jobless rate held at 7.6 percent, close to a four-year low.

Hourly earnings in the year ended in June advanced by the most since July 2011, giving Americans already buoyed by higher home prices more reason to boost their spending, which accounts for 70 percent of the economy. Economists at Goldman Sachs Group Inc. and JPMorgan Chase & Co. said after the figures the Fed will begin tapering sooner than they had projected.

“The June numbers together with the upward revisions should make a September tapering by the Fed the central scenario for the consensus” among economists, said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York , who projected a 190,000 gain in payrolls. “The improvement in employment and the improvement in wages suggests aggregate incomes are rising quite nicely.”

Stocks rose and Treasuries sank, sending the 10-year yield to the highest since August 2011, while the dollar rallied as the report fueled bets the Fed will begin to reduce the $85 billion-a-month in bond buying intended to fuel growth and put more Americans back to work.

“This just reinforces the view that the Fed can get the first initial cutback in asset purchases out of the way in September,” said Lou Crandall , chief economist at Wrightson ICAP LLC in Jersey City , New Jersey . To derail the Fed’s plans, July and August data […]

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