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FOREX-'Flash crash' hits sterling; U.S. jobs data weaken dollar
October 7, 2016 / 3:26 PM / a year ago

FOREX-'Flash crash' hits sterling; U.S. jobs data weaken dollar

* Dollar softens after weaker-than-forecast U.S. payroll
reading
    * Latest jobs data leave view on Dec U.S. rate hike intact
    * Sterling's sudden plunge in early Asia trade shakes
markets
    * Pound later rebounds from low but still down on day

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, Oct 7 (Reuters) - Sterling tripped lower on Friday
on what traders called a "flash crash" that knocked the currency
to a 31-year low, while the dollar slipped on news of
unexpectedly weak U.S. job growth in September. 
    Even before a sudden plunge that briefly shaved off a tenth
of the pound's value during Asian trading, sterling was headed
for its worst week since January 2009 as some national leaders
called for Britain to make a "hard" exit from the European Union
in which it would leave the single market.
    "I think it's a warning shot from the markets to the UK
about what type of potential volatility in sterling we may see
down the line," said Shahab Jalinoos, global head of FX strategy
at Credit Suisse in New York.
    On Friday, the pound plunged about 10 percent from levels
around $1.2600 to $1.1378 in a matter of minutes in
thin early Asian trading.
    Thomson Reuters later revised that low to $1.1491, which was
still the weakest level for sterling since 1985. The company,
which owns the Reuters foreign exchange brokerage platform RTSL,
said an outlying trade had been cancelled.    
    Sterling retraced to $1.2450 in U.S. trading, which
was still down 1.3 percent on the day.
    The pound pared earlier losses as other major currencies
strengthened against the dollar in reaction to a U.S. government
report that showed nonfarm payrolls rose 156,000 in September,
below the 175,000 increase forecast among analysts polled by
Reuters. 
    "The market was looking for an upside surprise so it was a
bit of a disappointment," said Jeremy Cook, head of currency
strategy at World First in London.
    The dollar index was last down 0.1 percent at 96.682.
It rose to a more than two-month high shortly before the release
of the payrolls report.
    The greenback fell hard against the yen, losing as much as 1
percent after the jobs data. It was last down 0.7 percent at
103.17 yen. 
    The euro rose 0.2 percent to $1.1174 but fell 0.7 percent to
115.22 yen.  
    Encouraging aspects of the September payrolls report, which
showed a higher participation rate and steady 0.2 percent rise
in wages, limited the dollar's loss and supported market
expectations the Federal Reserve would raise interest rates at
its Dec. 13-14 policy meeting.
    "It was steady, not a flashy report. It's changed very
little on people's mind about a December rate hike," World
First's Cook said. 
    Currency bid prices at 11:08AM (1508 GMT)
 Description  Last           U.S. Close  Pct Change  YTD Pct
                              Previous                Change
                              Session                
 Euro/Dollar  $1.1170        $1.1149     +0.19%      +2.85%
 Dollar/Yen   103.2300       103.9300    -0.67%      -14.32%
 Euro/Yen     115.30         115.91      -0.53%      -12.49%
 Dollar/Swis  0.9788         0.9802      -0.14%      -2.30%
 s                                                   
 Sterling/Do  1.2456         1.2614      -1.25%      -15.48%
 llar                                                
 Dollar/Cana  1.3242         1.3216      +0.20%      -4.31%
 dian                                                
 Australian/  0.7576         0.7582      -0.08%      +4.14%
 Dollar                                              
 Euro/Swiss   1.0939         1.0935      +0.04%      +0.49%
 Euro/Sterli  0.8963         0.8832      +1.48%      +21.66%
 ng                                                  
 NZ           0.7143         0.7159      -0.22%      +4.66%
 Dollar/Doll                                         
 ar                                                  
 Dollar/Norw  8.0879         8.0429      +0.56%      -8.51%
 ay                                                  
 Euro/Norway  9.0348         8.9750      +0.67%      -5.90%
 Dollar/Swed  8.6476         8.6308      +0.45%      +2.83%
 en                                                  
 Euro/Sweden  9.6614         9.6180      +0.45%      +4.99%
    

 (Additional reporting by; Sam Forgione in New York; Anirban Nag
in London; Masayuki Kitano in Singapore; Editing by Lisa Von Ahn
and Meredith Mazzilli)

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