Australian Dollar Falls This Week

Last week was volatile for the Australian dollar, but it generally declined against most other major currencies as the concern for the economic growth continues to haunt the markets.

The currencies linked to the growth had hard time to sustain their strength as signs of the slower economic growth were coming from all parts of the world. The main source of the worries is, of course, the US with its economic data, which causes the talks about the possible double-dip recession. But the traders’ concerns aren’t only about the US as Europe too reminded about its economic weakness. The forecast, that the report will show the worsening German business climate, significantly slashed the confidence in the European economy, as Germany was the main reason for the hopes in the brighter future for the EU fiscal conditions.

Dollar and Euro Falls on Lower German Production

Euro fell vs. dollar after the report showed which the industrial output in Germany declined and on the speculation which the conditions on the US labor market improved.

The German industrial production fell 0.6 percent in June, while the economists expected another month of the growth after the production expanded as much as 2.9 percent in May. The US non-farm payrolls expected to fall as the temporary census workers quit job, but the number of jobs, excluding the government workers, should increase.

Dollar Strengthens on Services & Employment

The currency of US rose today against the Japanese yen and the euro after the reports showed that the US employers added more jobs than expected and the service industries expanded with increasing pace.

The US non-farm payrolls increased by 42,000, as was reported by ADP Employer Services. The median forecast was the 38,000 growth. The non-manufacturing sector grew in July for the seventh consecutive month, as was shown by the non-manufacturing index, which registered 54.3 percent in July, compared to 53.8 percent registered in June. The figure above 50.0 indicates industry expansion, below indicates contraction.

The employment was the one of the main sources of concerns for the US citizens. Therefore, the good news from the labor market improved the outlook for the US economy significantly. The Federal Reserve acknowledges the slowdown of the economy, but may refrain from adding more stimulus after the reports suggested that the US economy is healthier than it looked previously.

EUR/USD traded near 1.3137 as of 17:13 GMT today after it opened at 1.3229. USD/JPY rose to 86.22 from 85.76 after slumping as low as 85.32.