Lira sinks below 2.2 against dollar on weak US job data

ISTANBUL

AP Photo

The Turkish Lira dropped to below 2.19 against the dollar on Feb. 7 following the release of U.S. January jobs creation data that suggests employment in the country remains weak for a second consecutive month.

According to the much-awaited figures, U.S. employers hired far fewer workers than expected in January and job gains for the prior month were barely revised up, suggesting a loss of momentum in the economy, even as the unemployment rate hit a new five-year low of 6.6 percent.

The lira, which was being traded at levels of over 2.2210 against the dollar, rose to 2.1890 after the report, despite falling below 2.220 again later.

The data that revealed the weakest two months of job growth in three years also sent the euro/lira ratio below the 3.0 threshold.

Nonfarm payrolls rose only 113,000, the Labor Department said Feb. 7. But with construction recording the largest increase in jobs in a year, cold weather probably was not a major factor in January.

“It is an improvement but a number this soft does feed worries about slowing U.S. growth,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.

 The second straight month of weak hiring - marked by declines in retail, utilities, government, and education and health employment - could be a problem for the Federal Reserve, which is tapering its monthly bond-purchasing stimulus program.

The unemployment rate is now flirting with the 6.5 percent level that Fed officials have said would trigger discussions over when to raise benchmark interest rates from near zero.

But policymakers have made it clear that rates will not rise anytime soon even if the unemployment threshold is breached.

The data also comes on the heels of a report on Feb. 3 showing a surprise drop in factory activity to an eight-month low in January.

The U.S. economy grew at a robust 3.7 percent annual rate in the second half of 2013, buoying hopes that it is now on a path to sustained growth.