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June 2016

Sterling flat as markets take a breather

Published: Friday 03 June 2016

  • Sterling flat as markets take a breather
  • USD may weaken on employment data
  • ECB unchanged and very predictable

The ECB met yesterday and left their base rate on hold as expected. They also, as expected, announced a corporate bond buying programme to start on 8th June and made noises about their view that the downside risk to the EU economy is receding. It begs the question that, if risk is receding, why do they feel obliged to try to boost activity with further QE funds but everyone was too polite to ask. The Euro was largely unchanged on the news because it was exactly what had been so blatantly heralded by the ECB themselves. Sentiment in the manufacturing and service sectors in the Eurozone moved a tad higher in May and that will help the Euro to some degree but there are further hurdles ahead. 
Sterling was unmoved by the barracking David Cameron got in last night's televised Q&A session. The Pound sat rather motionless for most of the day yesterday. The upturn in UK service sector sentiment, as reported this morning, will give Sterling a little support. It's interesting that this rose for the 5th straight month in spite of the Brexit furore.  The lack of other UK data today should leave the Pound to wibble around in the wake of the USD as we approach the US employment report. As with David Cameron's debate, I doubt Michael Gove's 'Leave' messaged Q&A will be market moving when it is aired tonight.
But back to US employment data; last month's non-farm payroll count was well below expectations and there is a chance this month's data will also disappoint. All will be clear at 13:30 BST but anything less than 160,000 fresh jobs and anything worse than a 4.9% unemployment rate will weaken the USD. If you are a USD seller, you have a few hours to protect your interests.
And it's here at last. The machine that irons and folds your clothes has been invented and I want one. FoldiMate is a clothes steaming and folding machine that gives you back your washed clothes, folded and stacked and crease free. It'll be available in 2018 apparently at a cost of $850 (so that'll probably be £850 then) and its small and portable and looks cool and I really want one. Did I already mention that I really want one?
Have a great weekend.


Teacher: "If you had a Pound and you asked your father for another £1.50, how much would you have?"
Jimmy: "One pound."
Teacher: "Ah! So it seems you don't understand addition."
Jimmy: "Ah! It seems you've never met my Dad"


Today's Major Economic Releases 

Market BST Data/Event Previous Expected
GBP 09:30 UK: Services PMI 52.3 52.5
CAD 13:30 Canada: Trade balance -3.4 -2.5
USD 13:30 US: Average hourly earnings m/m 0.3 0.2
USD 13:30 US: Non-farm employment change 160 159
USD 13:30 US: Unemployment rate 5.0 4.9
USD 15:00 US: ISM non-manufacturing PMI 55.7 55.4

Daily Currency Insight by David Johnson

Daily Currency Analysis with William Busby

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