As the economy recovers, less stimulus will be needed by the federal government, which tends to increase credit jitters and cause brief fluctuations in the global markets.
On Friday, June 7th, the employment data came out, showing that the US dollar remained strong and stable even while employment seemed to go up, indicating that the federal reserve would again reduce the number of bonds it would buy, as reported in iforex. As the economy recovers, less stimulus will be needed by the federal government, which tends to increase credit jitters and cause brief fluctuations in the global markets.
Employment Data Increases Money Flow
In April, 282,000 jobs were created, with another 217,000 created in June. This expanse in employment, with the vast majority of those jobs in the private sector, was much better than what economic experts predicted. Although the majority of professional opinions stated that there would be a slight uptick in the overall employment rating (from 6.3% to 6.4%), the number of jobs that were created kept the employment rate from moving. Even though this newest bout of employment information is not the most exciting change, it still shows to the federal government that less assistance is required. As a result, the Federal Reserve will reduce the amount of monthly asset purchases it makes. Standard and Poor announced recently that the United States’ credit score will remain at its AA+ rating. Although this is down from the AAA rating it lost in 2011, S&P has recognized that the overall budget deficit has been reduced and that equities have risen.
Canada’s Dollar at Four Week Low
Canada’s dollar recently fell to its lowest price in a four week period when compared to the US dollar. This occurred after the latest employment numbers came up, indicating that full time positions were lost and that unemployment went up to a steady 7%. The overall rate of exchange for the Canadian dollar depreciated after officials from the Bank of Canada stated that there is a good chance that the Canadian economy’s expansion is very slow. The number of people on full-time payroll fell by 29,100.
Euro in a Tight Range of the Yen
It was recently discovered that the Euro was trading in a very close range of the Yen. The Yen weakened substantially after the prime minister of Japan, Shinzo Abe, announced that there were plans to reduce the overall rate at which corporations are taxed during 2015. The goal of this tax rate reduction is to attract companies from other countries to start investing and building in Japan, creating more jobs and bolstering the economy. The Bank of Japan meets soon, although most predict that there will not be many striking policy changes made because the governor of the bank, Haruhiko Kuroda, is very optimistic that the bank will soon recover. As a result, there is no need for any policy changes.
Clearly from this data, the world’s economy is very slowly recovering from its economic downturn in 2007 and 2008. The United States is doing better than others, especially Canada, but the Yen and the Euro remain relatively stable, even after the latest employment data was released.