Euro Drops Below 1.28 - 6.1.2012

US Dollar Asian stocks sank into the red territory on Friday amid renewed European debt concerns. Even better-than-expected macroeconomic data from the United States failed to improve confidence. Japanese Nikkei fell 1.16% to 8390.35 despite the US S&P 500 gained 0.3% to 1281.06 yesterday after reports from the labor market confirmed the economy is recovering. The number of private payrolls calculated by ADP Employer Services increased 325000 in December compared with 204000 in the previous month, while the number of initial jobless claims dropped by 15000 to 372000 in the last week of 2011. The key employment data however will be released only today. According to preliminary estimations the Labor Department may say the number of non-farm payrolls increased in December by 150000 following a 120000 gain in November. The dollar is gaining ground against its major counterparts – the currency’s index climbed to a one-year high in Asian trading hours – 81.06. Euro The euro extended losses yesterday after the required bond yields surged at a French debt auction. The currency weakened to the lowest level since 13 September 2010 (1.2763) against the dollar and to the lowest in 11 years (98.47) against the yen. In the euro zone today we would underline the reading of November retail sales, which probably dropped 0.9% annualized, and of unemployment statistics for the same period. According to expectations, the unemployment rate stayed at 10.3% in the euro area. The single currency traded in a narrow range today in the morning – 1.2763-1.2798 after loosing 170 basis points yesterday. British Pound The pound weakened against the dollar but strengthened against the euro as service industries in the UK grew at the fastest pace in five months in December. The purchasing manager index climbed to 54 from 52.1 in the previous month, suggesting the economy is partly withstanding the euro-area debt crisis. The pound advanced to a 16-month high against the euro – pair EUR/GBP dropped to 0.8244. Pair GBP/USD was flat in the morning at 1.5475-1.5507.