French unemployment rising
Most countries are seeing their unemployment rates lower in the post-lockdown phase of covid but French unemployment rose again in Q3 to 8.1%. Amidst all the warning signs for the European Central bank, this is just another one to add to the pile. So it is no surprise that the GBPEUR rate is still hovering just below €1.1900 and the EURUSD rate is still stuck around $1.1350.
Improved US jobless numbers support USD
The GBPUSD rate is pushing $1.35 but finding it a tough nut to crack. In contrast to France, the number of Americans filing for unemployment welfare slowed again last week to 268,000. That’s the lowest level since before the covid pandemic; a very encouraging sign for the US Federal Reserve and we have several Fed speakers today. All we all want to know is when the Fed will start downsizing its balance sheet and when it will start raising interest rates. Any hints of that will be seized upon.
South African interest rate hike boosts ZAR
And speaking of interest rates, the South Africa Reserve Bank threw in a surprise rate hike yesterday, taking their base rate up to 3.75% for the first time since May 2020. That wasn’t a unanimous decision amongst the board’s members but the fear of rising inflation was at the root of the majority 3-2 vote. The GBPZAR rate shot down from R21.20 to R20.97 and is back up to R21.04 as I write on Friday morning.
GBP up on retail sales beating forecasts
Part of that early bounce is due to Sterling benefitting from better-than-expected retail sales data. The year-on-year change in high street activity was a contraction of 1.3% and that’s poor but the markets had expected much worse. The consensus was a drop of 2.0%, so, having been wrong-footed, traders bought the Pound. That’s all the UK data for today though, so a bit of profit-taking is likely to lower the value of the Pound through the day.
We will see Canada’s House Price Index and retail sales data this afternoon. GBPCAD has pushed back up to hover around CAD 1.70 but it isn’t looking strong at that level. The forecast for retail sales is a contraction of 1.7%. Anything better than that will most likely see this pair back below CAD 1.70 and the main support level appears to be CAD 1.6850.
NZ interest rate hike likely next week
As well as US GDP data and a tsunami of purchasing managers indices from across the known world, next week will also bring an interest rate decision from the Reserve Bank of New Zealand. There is a very strong chance the RBNZ will lift their base rate from 0.5% to 0.75%. Right now, the GBPNZD rate is in a range of less than one percent between NZD 1.9120 and NZD 1.9300. A rate hike should push that lower. So, between now and the RBNZ meeting early Wednesday, we have to assume the GBPNZD rate will slide a little as traders prepare for the expected rate hike. Risk-averse NZD buyers may wish to cover some of their needs before then to avoid the risk.
Next week ends with the US Thanksgiving Day holiday and the dreaded Black Friday. Cue news clips of covid-ignoring people fighting over big tellies in supermarkets. I will leave you to get on with your Friday with this thought from Will Ferrell. “Before you marry a person, you should first make them use a computer with slow Internet to see who they really are.”