The dollar plunged in trading this afternoon after data revealed the U.S economy cut 131,000 jobs in July, intensifying fears about the U.S economic recovery. This was roughly double what had been expected by economists. Private employers added 71, 000 jobs, fewer than the 100,000 expected.
The dollar fell 0.28% against sterling, to $1.5935. It also plummeted to an eight month low against the yen, falling to 85.49, from around 86.00 before the data. The euro rose to $1.3210, from around $1.3180 before the release.
Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments comments, âThis is a really disappointing result and will surely stoke concerns about the health of the U.S. recovery. It is going to have a huge impact on investor confidence.
âThe concern for the UK market will ultimately be contagion. We saw a drop in industrial production this morning, which caused sterling to fall. The mood of optimism may be dimming.
âWith the U.S recovery appearing to slow, we may now see the Federal Reserve step in and resume their quantitative easing programme, to help the economy gain traction.â
Sterling had already fallen this morning after UK industrial output fell 0.5 pc in June, against forecasts for a rise of 0.2 pc. The pound fell 30 pips to around $1.5870, and against the euro to 83.10p.