NZ unemployment drops to 4.0% – NZD strengthens
It is funny to look at an Olympics podium and realise the 19-year-old on the top step is 6 years older than either of the other two. Even 13-year-old Brit, Sky Brown was older than 2nd placed Kokona Hiraki, who is 12. But Sky is the youngest ever British Olympic medal winner. Huge congratulations to her. I was playing schools level rugby at her age. I feel like I underperformed now.
The big mover overnight is the New Zealand Dollar. I said yesterday that it might be volatile overnight. I wasn’t wrong. The Kiwi Dollar pushed Sterling down to NZD 1.97 this morning after NZ unemployment dropped to 4.0% in Quarter 2. That was down from 4.6% in Q1 and well below the market forecasts. That very positive data overwhelmed the negativity caused by a 1.0% drop in global dairy prices.
The Asian markets generally have a positive overnight session after the Chinese Caixin PMIs were well above expectations. Australian retail sales came in on forecast; reflecting a 1.8% decline, and this morning’s release of the Spanish service sector PMI was lower than expected but still positive.
We get a slew of other purchasing managers indices today. This morning includes the Eurozone composite PMI and their retail sales as well. The GBPEUR rate is working its way back up to that ceiling level of €1.1760, which equates to one euro buying 85 pence. This has proven to be an impenetrable barrier over the past 18 months, with sporadic forays up to €1.18 being snubbed out very quickly.
Lacking data, GBP slides
The Pound spent most of Tuesday slipping in value. The lack of data from the UK was to blame but things pick up today. If today’s composite and service sector PMIs prove positive, we could see another test of €1.18. Euro buyers will be hoping so. However, if history repeats itself, and it often does in foreign exchange markets, another retracement from €1.18 is the likely outcome, so only the brave will be pinning their hopes on a rally beyond there.
The afternoon is dominated by US data. Their service sector PMIs and the ISM employment survey will take centre stage. The forecasts are generally middling, so only a significant variation will move the USD.
US traders await employment data
We will have a speech from the vice-chair of the US Federal Reserve’s Board of Governors but whatever Mr Clarida says, his word will be overshadowed by Friday’s US employment report.
Sterling traders will be poised to hear what the Bank of England has to say tomorrow. So volatility may be a little muted today.
And we started this report with young high-achievers. On this day in 1772, William Blake started work as an apprentice to an engraver at the age of 14. I wonder what led from that to the words of The Tyger or Jerusalem.