USD recovers ahead of inflation data

Well, that was one helluva weekend. Emma Raducanu – simply awesome, F1 racing – exciting for a change with Daniel Ricciardo smiling again and two young British talents shining through, trials starting of a new test that can detect cancer before the symptoms show, double vaccinated Brits not needing to self-isolate if they return from overseas travel and covid passports being scrapped for clubs. It’s all go, isn’t it?

In the financial markets, things were a little quieter. Friday’s Canadian employment data was better than expected in some ways. The unemployment rate dropped down to 7.1%, better than forecast, but jobs growth was only 90,000 and the markets had been expecting 100,000 plus. So the Canadian dollar didn’t strengthen on Friday but the GBPCAD exchange rate is half a cent lower this morning. Despair starts today at 1.7505 after sterling fell a little bit in early trade.

Sterling’s fall seems to have more to do with the US dollar than the pound itself. we have seen U.S. dollar strength right across the board this morning. That has bought the GBPUSD rate down to 1.3805, just over half a cent lower than Friday’s highs. As has been quite common in recent weeks, Monday’s data diary is fairly thin. In fact, there is nothing of any great interest due from the UK and only the Federal Reserve balance from the US. So, unless this morning’s monthly report from OPEC produces any interesting news, there is a very good chance this pair will trade in a narrow range through Monday.

Tomorrow will be more exciting. UK employment data and US inflation data will see to that. The strength we have witnessed in the USD this morning must be largely attributable to expectations of higher US inflation, which would tie in with similarly positive numbers from elsewhere.

GBPEUR holding onto gains

On the UK side of that, another fall in the UK unemployment rate is expected. A 4.6% unemployment rate would be good. Anything lower than that should boost the Pound. The GBPEUR exchange rate is maintaining the gains it made in the latter part of last week. This morning’s 1.1715 is more than a cent above the low we saw last Tuesday Under appears to be a slight upward trend in this chart. As before 1.18 is the obvious target. We shall see if sterling has the gumption to get to that level but probably not until we see tomorrow’s employment data.

AUD and NZD strengthening after USD driven weakness

US Dollar strength generally weakens the likes of the Australian and New Zealand dollars. we saw some of that on the GBPAUD exchange rate pushed up to 1.8830 but he’s back down to 1.8770 today. The pattern is similar in the sterling to New Zealand dollar exchange rate. That spiked to 1.9475 on Friday and he’s barely above 1.9400 this morning. All this volatility is kind of inevitable, given the sporadic positive and negative data re covid and recovery.

And on this day in 1985, Super Mario Brothers was first released in Japan on the NES machine. Mario looked in his 30s when it was released, so he is probably a Septuagenarian now. Maybe he should slow down a bit.

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