Sterling rose to a 2 month high versus the Dollar and appreciated to the higher end of recent ranges versus the Euro after the release of strong U.K. employment numbers. The number of jobless claims in June fell to -20.8K from an upwardly revised -30.9K for May while the ILO unemployment rate fell to 7.8% from 7.9%, better than expected. Initial gains made were eventually reversed as analysts warned the data was merely the ‘calm before the storm’ ahead to the expected public sector job cuts this winter.
EU CPI y/y came out in line with expectation at 1.4% in June while May’s industrial production figures remained unchanged. The data disappointed somewhat and weighed on the Euro but gave no benefit to the Pound.
U.S. advanced retails sales figures improved by less than expected but gave the Dollar some support as the fears of a trend in economic slowdown for the United States eased. Strong corporate earnings releases boosted investor confidence and risk appetite and quickly saw the Dollar on the back foot again as safe haven demand lessened. The Fed minutes last night had a muted impact on the Dollar despite its slightly dovish tone. The Fed stated the economic outlook for the U.S. had “softened somewhat” and that the central bank “would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably”.
Equity markets in Asia traded higher and kept risk appetite strong after Singapore posted better than expected growth figures which has led investors to believe China will also show strong growth.
There is no U.K. data scheduled for release today. The ECB will release its monthly report later this morning while in the U.S. PPI inflation and industrial production data is expected.
Live IB rates at 10.20 am UK
GBP – EURO 1.197
GBP - USD 1.53
GBP- AUD 1.736
EURO - USD 1.279
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Update By Baydonhillfx
http://www.baydonhillfx.com
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