The disappointing jobs report, that was release on Friday has built up a lot of uncertainty on the currency markets which has led the Dollar down against its major rivals- the Yen, and the Euro. Earlier during the week the Dollar managed to reach 100 Yen which is an important psychological level, but did not hold the gains due to the increased volatility on the international markets.
That was caused by the concerns for war in Syria and the fear that the Federal reserve may start tapering its 80 billion-per-month bond buying program. In addition investors were trying to find a balance between the slowly improving European economies, the prospects of weaker economic growth in China in the coming months and the recent selloff that hit many emerging markets.
In May the Federal Reserve chairman Ben Bernanke has announced for the first time that he was looking for an opportunity to reduce the tapering. He added that the employment statistics in the next months will be crucial for the decision to begin the winding down of the bond purchases. Many economists expect the reduction to start this month. After the job reports on Friday fell short of the expectations, some investors began to doubt the possibility that the tapering will come during the current month. Such uncertainty is bad news for the dollar, since it is expected that the greenback will appreciate as soon as the tapering begins. Late Friday in New York, the dollar was down 1% against the yen to ¥99.11 per dollar and 0.45% against the euro, reaching $1.3179 per euro.
To be sure, the monthly jobs data is notoriously volatile, and analysts said the Federal Reserve was unlikely to base its tapering decision on a single report, especially when other recent U.S. data, such as manufacturing has shown steady improvement. Others argue that the Fed—having hinted that tapering is imminent—would undermine its credibility if it failed to reduce its bond buying in September.