Soft US employment data makes USD slip
The US dollar is weaker this morning after a very soft US employment report on Friday. The markets had expected circa 200,000 fresh jobs to have been created in the non-agricultural sectors but the actual number was just 150,000. The unemployment rate rose slightly from 3.8% in September to 3.9% in October and the pace of average earnings rises slowed to 4.1% in the year to October. But unemployment rate is still good by historical comparison but the slowdown in job growth will make the US Federal Reserve think twice before they discuss tighter money supply. It would appear The US base rate will be on hold for a while and the Fed may even bring forward the first interest rate cut to the early part of 2024. The immediate impact is that the USD is slightly weaker, allowing the GBP/USD rate to creep up to $1.2375 and the EUR/USD rate to trickle higher to $1.0738. Technically speaking, there is a very good chance the GBP/USD rate will test $1.2450 but that does rely on important UK GDP data on Friday.
Euro steady ahead of Sentix investor sentiment index
Euro traders appear to be in two minds on the direction of the Euro. We will get a glimpse of eurozone investor sentiment at 9.30 GMT when the Sentix Investor Confidence Report is published. That has been in negative territory for 20 months or so and the forecasters believe it will slide even further into the mire in this report. This survey, plus eurozone retail sales data, are the headline events for the euro this week. As at this morning, the GBP/EUR rate has risen to €1.1530, the top end of its recent trading range. The EURUSD rate is also a little elevated – more to do with the weaker USD than the Euro – but that’s up to $1.0738 right now.
RBA rate hike a strong likelihood
The vast majority of economists and commentators believe the Reserve Bank of Australia will raise their base rate from 4.1% to a 22-year high of 4.35% when they meet in the early hours of tomorrow morning (UK time). The new governor and the first woman to hold the role, Michele Bullock, will make the announcement at 03:30 GMT. Assuming they do follow through with that decision, the key for the Australian dollar will be the statement that accompanies the decision. As at this morning, the GBPAUD rate is right in the middle of last week’s range at AUD1.9025