US Dollar

The USD sank to fresh lows against the Euro on Friday as Non-Farm Payrolls data came in dramatically lower than expected. The survey showed the US economy shed 65,000 jobs in February. Any doubt that the US is in the throes of a recession has been squelched. The fear now is that poor employment figures will start weighing on the economy as an additional burden on top of the collapse of the real estate market and tightening credit conditions. This is known as a ‘negative feedback loop’ as financial market strains lead to a weaker economy, which in turn leads to more financial turbulence. Wall Street initially rallied on the news as they expect the Federal Reserve to dramatically cut the Fed Funds rate. Goldman sees two 50 bps cuts at the next two Fed meetings while HSBC has lowered its Fed funds target to 1%.

Figures out today: 15:00 US Wholesale Trade