Dollar plunges as uncertainty dogs markets

THE DOLLAR took a nosedive against major currencies yesterday, after an initial data release indicated poor growth in jobs.

Automatic Data Processing, which estimates US employment growth, said the economy had gained only 135,000 jobs in May, less than the 170,000 estimated.

The dollar fell against all other major world currencies, with the pound up 1.3 per cent to around $1.56, and the euro up 1.2 per cent to over $1.32. Official data on jobs is released today, and fears for the dollar’s value are running high. If job creation is poor, it is likely that the Federal Reserve will continue quantitative easing (QE) for the foreseeable future, which may weaken the US currency. Ben Bernanke, chairman of the Federal Reserve, has pledged to hold QE until unemployment is below 6.5 per cent.

The decline was most marked against the yen, with $1 falling from ¥99 at the start of the day to below ¥96 in the afternoon, before ticking back up to ¥97. The yen is now back to the level it was five weeks ago, erasing recent weakness.