Sterling continues to recover
Sterling sellers ran out of reasons to continue on Thursday and the Pound made a reasonable recovery. That recovery was less obvious against the US Dollar though because a swathe of positive US data boosted the USD.
Having had a few troublesome days that saw the pound fall across the board, Sterling buyers came back into the market yesterday. For example, GBPEUR drove back up to the recent ceiling of €1.1650 and GBPAUD hit the level that has capped it since May 2020, A$1.84. Oh, and the pound also hefted GBPNZD up to NZ$1.97 again.
Sterling has these and some hurdles to clear if it is to re-establish its recent upward trend. This morning’s construction sector PMI is unlikely to be the catalyst that creates that leap. Traders are more focussed on the government’s decision over the 21st June target for reopening the rest of the economy and on trade talks with the EU. In that latter battle, the brinksmanship is almost worthy of playground tactics. ‘I don’t wanna play with you. I’m gonna take my ball and go home, said Chancellor Merkel. ‘Yeah, and you’re not allowed in our camp either’, said President Macron. ‘Well, in that case, you can’t fish in our pond’, Said PM Johnson, and everyone huffed off until they met again.
Rash of strong US data boosts the Dollar – employment report in spotlight
But I digress. Today is all about US employment data. After yesterday’s ADP report showed private payrolls levels increased by 978,000 in May, more than 50% greater than the market forecasts and weekly fresh jobless claims of 385,000 which was the lowest reading since March 2020, today’s data will set the tone for the USD. We can’t assume the monthly data will be as encouraging as these other numbers. However, if they are, the USD ought to strengthen on the expectation of the Federal Reserve bringing forward its interest rate plans. GBPUSD starts the day around $1.4120 and EURUSD is a little below its recent highs at $1.2115.
Yen stabilises after 13% jump in Japanese household spending
Overnight news included a solid 13% rise in Japanese household spending and that stabilised the rocky Yen. GBPJPY is hovering around 155.50 this morning although the Pound’s recovery is pushing this a little higher as I write.
Cad vulnerable to employment data
We need to remember that Canada’s employment data will also be published this afternoon. By way of contrast with the US numbers, we are expecting Canada’s unemployment rate to rise slightly to 8.2% or thereabouts. This will be uncomfortable for the Canadian authorities because the rate of improvement following the obvious slump last March is slowing and is still well above the more normal 5.5% levels that we saw before the covid events. The Canadian Dollar has been stoic of ate but this could unsettle it and GBPCAD, which starts Friday at a now-familiar 1.71 level, has plenty of scopes to rise.
And on this day in 1913, Emily Davidson threw herself in front of the King’s horse at the Epsom Derby to highlight the Suffragette campaign for women’s voting rights. Thank heavens the campaign succeeded (in part) 5 years later but what a terrible price to pay.