AUD slips on spike in unemployment rate

The Australian dollar lost ground overnight after the Australian unemployment rate spiked higher in October. A delayed recovery post-lockdown meant the unemployment rate rose to 5.2% from 4.6% in September. That confounded market forecasts of 4.8% as Australian employers shed 46,300 jobs. That’s the 3d fall on the trot and certainly looks like it may delay interest rate rises from the Reserve Bank of Australia. Hence the GBPAUD rate pushed up from an overnight low of AUD 1.8275 to this morning’s AUD 1.8350.

USD strengthens on inflation and China agreement

An agreement between China and the US to work on climate change policies has helped the US Dollar make some headway. Ironically, the US has also threatened China if there is an attack on Taiwan. That too adds strength to the US Dollar as investors search for safe-havens. Add in stronger than expected 6.2% US inflation (the fastest pace since 1990) which boosted the expectation that the US base rate could start rising as early as Q2 2022, and the overnight strength in the USD is understandable. The GBPUSD rate has dropped 2 cents in the last couple of days and starts Thursday clinging on to $1.34 by its fingernails.

EURUSD at 15 months low

That USD strength is also playing out in the EURUSD rate. This pair has dropped to levels last seen in July 2020. At this morning’s $1.1475, the momentum is very clearly downward. Technically, this pair could make $1.12 to complete a retracement after a yearlong head and shoulders pattern between July 2020 and August 2021.

The Canadian Dollar is tracking the USD. GBPCAD is down to a level last seen in March 2020 and appears to have broken the trading range it occupied from March 2020 to September 2021. That range was roughly 6 cents wide. A full-extension below that range would take GBPCAD to CAD1.63. So beware if you are a CAD buyer.

The GBPEUR exchange rate is still hooked to €1.17 by a bungee cord. The range this week has been just over half a cent – €1.1670 to €1.1730. You would have to suspect the Pound would be stronger were it not for the threat that the British Government might step away from the Northern Ireland agreement under the Brexit agreement. This morning’s release of UK GDP data showed a slightly weaker than forecast growth level in UK economic activity and that is undoubtedly holding the Pound back. 6.6% growth in the year to September is a tad down from the 6.8% forecasts but solid growth in construction and decent growth in manufacturing all helped steady the ship.

There isn’t a huge amount of tier one data for the rest of the day, so a degree of range trading is likely.

Quiet trading on Veteran’s Day/ Armistice Day

Today will also be quieter because it is Veterans Day in the US and many other allied nations commemorate the 11th of November as the day the guns fell silent at the end of the first World War. It always galls me that the UK shifts the marking of that momentous event to the nearest convenient Sunday. Approximately 20 million people lost their lives in WW1 and 21 million were injured in one way or another. I think that deserves a moment of reflection at 11 am.

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