Australian unemployment better than expected
The Australian unemployment rate unexpectedly fell in July to 4.6%. That was the lowest since 2009 and much better than any forecast. That should have strengthened the Australian dollar but Australia suffered its worst day since the pandemic started yesterday and that knocked the Aussie Dollar. GBPAUD is up to 1.91 for the first time since April 2020.
GBPNZD rate is the highest it has been since August 2020. The magic NZD 2.00 to £1 level is being tested as I write. The surprise lockdown In response to a single covid case shocked the markets and hammered the NZD. It is pretty clear the RBNZ will have to postpone any interest rate hikes and that weakens the yield on NZD assets.
GBPEUR is trading in a flat pattern around 1.1740. There is nothing of any significance on the data horizon from either side of the channel today. So we can probably expect more of the same on Thursday.
USD stronger as Fed tapering prospects rise
This afternoon will deliver enough US Data to keep traders interested. We will see the weekly jobless claims numbers; something the Federal Reserve is known to watch very closely. We will also see both business and Consumer sentiment indices from the Philadelphia Federal Reserve. Those are also influential.
EURUSD lowest since November
EURUSD is the lowest it has been since early November 2020 at $1.1675. The US Dollar has also pushed Cable (GBPUSD) down to $1.3690. That’s a level we haven’t seen since late July. This USD strength is being driven by increasing speculation that the US Federal Reserve will be seeking to tighten monetary policy in Q3 or maybe early in Q4. They and perhaps Norway would be the first to begin the long haul back to more normal interest rates but – covid willing – they will be followed by everyone else over the next 18 months.
Norges Bank may raise rates – a first
We will hear from Norway’s central bank this morning. Many believe they are ready to pull the trigger on higher interest rates as soon as today. So watch the Norges Bank this morning for their trailblazing plans. The GBPNOK rate starts the day around 12.28; amongst the highest levels, we have seen since last November. A rate hike could drop that, so beware.
It’s going to be a busy day, so I’ll let you get on with yours. Have a good one.