US labour data lifts Dollar, Sterling tumbles to new lows

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9 August 2017

Matthew Ryan

Senior Market Analyst at Ebury. Providing expert currency analysis so small and mid-sized businesses can effectively navigate international markets.

T
he monthly JOLTS job openings data, which represents job vacancies encompassing a variety of different US employers, come out much stronger-than-expected for June. Openings increased by 461,000 to a seasonally adjusted 6.2 million, its highest level the beginning of the series in December 2000. Combined with last Friday’s impressive nonfarm payrolls report and recent near record low jobless claims figures, yesterday’s news paints a very rosy picture of the US economy, bolstering the case for an additional interest rate hike by the Federal Reserve before the end of the year.

We have been saying since the FOMC’s last hike in June that another rate increase at the December meeting remains very much on the cards. The much more upbeat data in recent days has supported this view and we think that the repricing of interest rate hike expectations in the US should help reverse some of the Dollar’s recent depreciation that has seen it slump by around 10% so far in 2017.

Pound hits fresh 10 month low versus Euro on weak spending

Sterling slipped to another ten month low against the common currency on Tuesday after the latest consumer spending data from the British Retail Consortium provided further reason to be bearish about the UK economy. Retail sales grew more slowly in July than a month previous according to the measure with sales growth falling back to 0.9% from 1.2%, albeit marginally above forecasts.

Governor of the Bank of England Mark Carney will be the main focal point during trading today when he presents the central bank’s Inflation Report in front of the House of Commons at 11am BST. Carney is unlikely to deviate from last week’s rhetoric that highlighted the bank’s concern over the path of UK inflation and the likelihood that interest rate will remain at their record low level for slightly longer than previously expected.

Euro slips on solid US data, German import growth slows

The common currency had another relatively rough time of it on Tuesday, selling of by a little under one percent against the greenback following yesterday’s solid US data. Trade data out of Germany also suggested that consumer demand in Europe’s largest economy slowed markedly in June. Imports in Germany fell by 4.5%, a stark divergence from the 0.2% consensus, albeit offset by a smaller decline in exports.

The economic calendar is almost completely barren in the Eurozone today, with industrial production numbers in Italy the only data release of any note whatsoever. As we saw yesterday, even in the absence of any major economical or political announcement, the major currencies remain susceptible to relatively sharp moves amid typically thin August trading.