Sterling steadies as record UK jobs added

As Novak Djokovic becomes the first sportsman to be excluded for NOT taking drugs, foreign exchange traders are more focussed on UK political shenanigans and US Dollar strength.

There was a time when Prime Minister Johnson’s current problems would have been referred to as ‘partygate’ but I guess the ‘gate’ days are over. Either way, the vast amount of column inches devoted to drinks at number 10 have weakened Sterling but a very strong UK employment report this morning has abated that decline. Average earnings are still rising at 4.2% but the unemployment rate has come down to 4.1% as employers continue to add to the payroll. The unemployment rate is down to a level not seen since September 2020. There was a huge concern that the end of the furlough scheme would result in a rise in unemployment. That appears to have been completely averted.

So, although the Sterling to US Dollar exchange rate is lower this morning than it was at the end of last week a Pound will still buy $1 3640 at the interbank level this morning and that same Pound could buy EUR 1.1950.

The GBPEUR rate failed to break through €1.20 last week but it remains well supported in the mid €1.19 area. If this morning’s German and Eurozone economic sentiment indices are as poor as the forecasters suggest, we could see that €1.20 level tested again.

Sterling is also showing resilience in other exchange rates. GBPAUD hasn’t spent a lot of time above 1.90 since 2009. There was a brief foray in 2015 I don’t even briefer one in 2020. So it’s no surprise that that level is proving tough for sterling to break through. However ongoing concerns about COVID and the fragile economic recovery in Australia have allowed the pound two stay up at AUD 1.8960 this morning. We will get a consumer sentiment index from Australia overnight tonight I’m not made will have an impact on this pair.

GBPNZD above  NZD 2.00 but awaits dairy price data

The GBPNZD rate is above NZD 2.00 for the first time since May 2020 and, like the GBPAUD rate, missions above this big psychological barrier have been few and far between in the last decade. So it is no surprise at all the traders are very keen to snap up Kiwi dollars at these sorts of levels. That buying interest fulfills the prophecy and keeps the market tight around this right exchange rate. we will see the global dairy trade price index overnight tonight and that does have an impact on the Kiwi dollar. that, in itself all to create some NZD buying interest before the end of the day.

CAD strengthens on Jump in bond buyers

Even though Canada’s manufacturing sales figures were disappointing at 2.6% growth in November, the fact that CAD 30 billion worth of Canadian Government bonds were purchased by overseas investors in that same month has given the Canadian dollar a bit of a boost. GBPCAD is down to CAD 1.7060 this morning; having been more than a cent higher on Friday. we are expecting slightly weaker data in Canada’s housing starts figures for December this afternoon but that is largely to be expected in the Christmas month. It’s unlikely that will have any direct impact on the Canadian dollar.

And it is National Thesaurus Day. How scrumptiously exhilaratory it is to assimilate such an observation, I must say.

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