08 April 2013: Yen slumps as US - job figures hit dollar

 US job figures set alarm bells ringing as the  rise in job recruitment was half the expected. US employers added only 88 000 jobs in March  at a its slowest pace in 10 months.  The job figures published on Friday triggered fresh concerns about a slowdown in the world’s largest economy.  Equity markets fell and might indicate that the last months strong US stock rally has come to an end. Expectations of a fast recovery might have  run  faster than what is economic fundamental realities.

 The dollar plunged in relation to EURO and other major currencies.  The Euro/USD rose to a two week high at 1.3039 stabilizing around 1.30 in early Asian trade today.  The British pound, GBP, hit the strongest level in six weeks at 1.5362 on concerns of the health of the US labour market. Oil prices fell.  Brent crude trades at USD 104,50 a barrel.

 The Japanese yen, JPY also fell dramatically.  USD/JPY trades at 98,52 after he Japanese Central Bank (BOJ) announced strong quantitative monetary  easing measures to combat deflation.  After falling 20 % in some few months, analysts ask how far down the JPY would be permitted to go. Recent developments might encourage investors to shift back to  yen as a funding currency instead of the dollar. The data may encourage more long European currency/yen trading with yen  as the favoured funder.  It might  reinforce the yen’s place  as the favoured carry trading currency.

 The Euro received a boost earlier last week as the European Central Bank held rates at 0,75 % and the ECB President, Mario Draghi,  sought to reassure markets that the Cyprus bailout should not be seen as a template for possible future bailouts in the  eurozone.  In a memorandum of understanding between the parties involved in the bailout; Cyprus, ECB, IMF and the EU-commission, severe budget cuts and privatization of state owned assets are among the measures needed for Cyprus to receive its periodic allotments of bailout money.

 The anger and public fury run high on the island. Adding to the public tension a financing consulting firm, Alvarez & Marshal hired by the Central Bank to make investigations on  the banks behaviour leading up to the crisis, revealed that two of the most senior executives at the Bank of Cyprus may have deleted crucial emails pertaining the bank’s disastrous buying of Greek government bonds just before Greece’s international bailout in 2010.

 While most attention over the last weeks has been directed towards Cyprus, the leak of 2.5 million files containing details of offshore accounts of some of the world’s wealthiest individuals has added fuel to Europe’s debate over the economic crisis.  In a situation where many struggling Europeans are asked to tighten belts and pay more taxes, the political and financial elites of Europe have stuffed their wealth in offshore tax havens as British Virgin Islands, the Cook island and Singapore,  making German, EU and IMF accusations against Cyprus pale in comparison.  The latest money laundering and  tax exemptions accusations  involve reputable Western European banks as Deutsche Bank, and individual top German and French bankers and politicians.

Follow up with or daily market reviews on http://www.MAYZUS.com/en/market-reviews.html