It was a quiet start to the day yesterday due to the observance of Remembrance Day in Europe. Europe's shared currency was whipped around though as Mario Draghi, speaking at the Bank of England open forum, addressed the need for closer economic union among member states. This disappointed Investors who were expecting more detail on the need for more quantitative easing. There were conflicting views from other ECB policy makers on the news wires yesterday as Executive board member Benoit Coeure stated that a decision to loosen the money supply had not been taken and that European recovery was on track , whilst Vice President Constancio commented that there were new downside risks to the Euro area recovery and that the ECB's policy must remain accommodative. All of that points to more QE and perhaps a negative deposit rate but no movement just yet.
The morning's other main news was a fantastic UK unemployment report. The unemployment rate dropped to 5.9%; well below market forecasts of 6.1 to 6.2%. That gave Sterling traders a bit of a fillip. Wages growth wasn't as stellar but the general trend for UK employment is upward and the increased population meant more people were in work than ever. I have to say I was surprised by the news, I expect we will see some evidence of the impact of the steel industry redundancies in the months ahead but not in this month's release.
The Sterling – Euro rate is testing the same high it failed at in August and earlier this month. If the pound manages to break through €1.42, there is likely to be a rapid scamper up to €1.44. So, if you are a euro seller, these may look like unattractive levels right now, but things may well get worse.
Australian unemployment was in the news overnight. A very strong set of data surprised many and boosted the Australian dollar by 3 cents against the Pound in a matter of minutes. The Sterling – Australian Dollar rate is still in an upward trend though and as long as this pair remains above A$2.11, I think we will continue on that upward path.
The rest of today is pretty quiet but traders in the US and across Europe are back at their desks after a day's holiday, so we may see an acceleration of yesterday's moves. Have a great one.
A guy storms into a flower shop and shouts at the manager, "What the hell were you thinking?
I've lost one of my best clients and it's all your fault."
The manager says, "I am sorry but I don't know what you're talking about. Can you please calm down and tell me what we have done wrong?"
"Well," says the customer, "My best client moved to a new office block and I asked you to send them flowers saying "You'll be sorely missed. He thinks I have ended the relationship and he's gone elsewhere".
"Oh my word!"
Says the manager.
"I know", says the guy. "It's a disgrace."
"Yes I am sorry for that," says the manager," but I am more worried that the flowers at Mr Jones's funeral will say 'We hope you're delighted with your new location.' "