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Friday 13.35 GMT. The dollar has held around its four-year highs after October’s US jobs report made showed the creation of fewer-than-expected jobs in the month.
The closely-followed data – which influences market expectations for the timing of the first rise in US interest rates off crisis-era lows – showed that 214,000 jobs were added to the US economy and that the unemployment rate stayed steady at 5.8 per cent.
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Consensus forecasts had predicted that the non-farms payroll data would reveal that 232,000 jobs were added to the US economy outside the agricultural sector, although analysts were getting more bullish as the data approached, with some forecasts revised to around 250,000.
The dollar index is pausing for breath after its strong run higher over the week, and is flat at 88.039 – remaining around its best level since 2010.
European equities indices are slipping back. The FTSE Eurofirst 300 is down 0.1 per cent, with the Xetra Dax 30 in Frankfurt 0.3 per cent lower. The Cac 40 in Paris is 0.6 per cent weaker. London’s FTSE 100 is bucking the regional trend, up 0.6 per cent at 6,591.64 with its heavily-weighted miners leading the rally.
The euro is up 0.2 per cent at $1.2404, picking up from the two-year low it hit on Thursday after the European Central Bank’s signal of unanimous support on its governing council to increase its balance sheet by €1tn, though no new detailed policy action was announced.
The main action of the day has been in Moscow, where the rouble has touched new lows against the dollar and the euro amid concern about the implications of the Russian central bank’s softer policy on defending the currency.
The Central Bank of Russia said on Wednesday it would not spend more than $350m a day buying roubles to ease the currency’s slide, pledging to allow the exchange rate to be determined “predominantly by market factors”, although it stands ready to make one-off interventions.
The rouble weakened in early European trade – falling 2.2 per cent and extending its losing streak to six consecutive days – with as many as Rbs48.62 required to buy a single dollar. That took its slide over the week to 13 per cent.
In the year to date against the dollar, the rouble has lost 48 per cent of its value. Up to Rbs60.15 were needed to buy a single euro. Both of those exchange rates represent record lows for Russia’s currency.
But it found support on market speculation that the CBR was meeting to discuss the crisis. It left behind its record low of 48.62 per US dollar to reach Rbs46.411, an intraday swing of over 5 per cent.
Analysts at Russian bank VTB went as far as to say that the rouble’s slide “poses certain risks for financial stability” and could trigger “sizeable” Central Bank of Russia interventions, according to Bloomberg. The VTB analysts were not immediately available for comment when contacted by FastFT.
Timothy Ash, of Standard Bank, said of the currency’s recent falls: “This is a huge, huge move.”
Danske Bank analysts said there were three reasons for the re-acceleration of the rouble sell-off:
● It is becoming increasingly clear that the ceasefire in eastern Ukraine has broken down – and both sides of the conflict are now quite openly admitting this.
â—Ź The continued drop in oil prices is a significant drag on the rouble. Other commodity currencies have also been under significant pressure this week and this is likely pushing the rouble down.
â—Ź The continued dollar rally. A stronger dollar is rarely good news for the rouble.
Alex Nice, at the Economist Intelligence Unit, said: “The devaluation raises questions about external corporate debt sustainability and financial stability. The cost of servicing external debt is climbing with every fall in the rouble.
“EU and US sanctions on the banking and energy sectors mean that it is currently very difficult for companies to refinance their debt – and large external debt repayments of over $30bn are due in December. The government and central [bank] may have to take action, either to defend the rouble, or provide additional support to companies facing financing difficulties, or both.”
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There is also some respite for the slide in oil prices, welcome news for crude-exporting nations, including Russia. Brent crude, the global oil marker, is up 0.9 per cent to $83.63. US WTI is up 1 per cent at $78.70.
Gold put in a brighter showing after its fall this week to a four-year low. It bounced 0.3 per cent to $1,143.65 an ounce, limiting its loss since Monday to around 2 per cent.
Most Asian indices came off intraday gains to settle lower. The Hang Seng in Hong Kong is down 0.4 per cent and the Shanghai Composite is down 0.3 per cent. Tokyo’s Nikkei 225 bucked the trend, up 0.5 per cent and bringing its gain since last Friday to over 8 per cent after the Bank of Japan’s shock move to take more stimulus action.
