Weak US Jobs Data Sinks Dollar

04/06/2015 9:00 am EST

Focus: FOREX

In this article, James Hyerczyk, at FXEmpire.com, shares his outlook for the markets this week given the fact that the US dollar was hit hard on Friday after the Labor Department said the US economy added a weaker-than-expected jobs number for March, the worst reading since December 2013.

The euro and British pound rose and gold is expected to follow through to the upside on Monday after the Labor Department said the US economy added a weaker-than-expected 126,000 jobs in March, the worst reading since December 2013.

The weak report likely means that investors will take a June interest rate hike by the US Federal Reserve off the table. The number was so unexpectedly low that some traders are casting doubt on a September hike.

Analysts had expected 243,000 new jobs for most of the week. Some lowered expectations to 220,000 new jobs after a weak ADP private jobs report on Wednesday. The government also reduced February’s reading by a combined 69,000. The unemployment rate was unchanged at 5.5%, it’s lowest since May 2008.

The markets were closed in the US and Europe for Good Friday so traders should expect extreme volatility when they open on Monday. Given the weak jobs report, the EUR/USD and GBP/USD should find support. Gold could see a huge rally if the US dollar gets hit hard.

Crude oil prices are expected to open lower on Monday because of the Iran nuclear deal, but losses may be limited by a weaker dollar. Late Thursday, Iran reached a preliminary agreement with six world powers over its nuclear program. The lifting of sanctions against Iran could mean the country will be allowed to export more oil. Global oil supply is expected to rise, putting further pressure on an already weak market.

By James Hyerczyk, Analyst, FXEmpire.com

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