FOREX: Weekly review.[E]

USD fell on Friday to three-weeks lows against EUR and decreased against yen after May report showed non-farm payrolls rose 75,000 only. The data appeared below the lowest forecasts and led to new speculations FED will take a pause on a bases of recent data on a labour market situation. Remind that April payrolls made 126,000. Unemployment rate decreased to 4.6% against 4.7% in April. The average forecasts for payrolls were +170.000.
« Now Payrolls may become a major fact for FED rates pause,» says Lara Rhame, currency strategist from Credit Suisse Holdings. USD has lost 1.5% against EUR and 0.9% against yen for the week. Other economic data didn’t favour the USD. April factory orders decreased 1.8%. Besides on Thursday manufacturing ISM became weak. Institute of Supply Management informed that manufacturing ISM fell in May to 54.4 against April’s data 57.3 and awaited 55.7. Price component in ISM index grew to 77 against prior 71.5. This was led by raising steel, copper and other commodities prices.
Recent data shows the slowdown expansion in economy and inflation pressure increase that explains FED fears and confirm FOMC Minutes as to growth of inflation pressure beginning from the prior FOMC meeting. This makes Fed confused on a further moves. This time interest-rate futures are priced in 46% chance Fed will raise it’s borrowing costs on 25 b.p. to 5.25%. Before the payrolls this possibility estimated 68%.
Now we can see the negative sentiment upon the USD and wait for further pressure on currency. In 6-month prospect EUR can climb to $1.3300 against USD, believes Kamal Sharma, currency strategist from the London department in Bank of America Corp