Sterling
The Pound rose against most of the majors yesterday ahead of this morning’s labour market report, which is tipped to see UK unemployment remain at 5.1% and wage growth accelerate from 2.1% to 2.3%.
Weak average earnings figures have helped the Bank of England leave interest rates at the current 0.50% record low for 85 months in a row now, but if wages continue to accelerate the potential for higher rates will likewise increase.
BoE Governor Mark Carney said yesterday that he had ‘no appetite for negative rates’ and this helped support Sterling. But the BoE Chief also reiterated that British economic growth would likely shrink in the aftermath of a ‘Brexit’.
Euro
The Pound to Euro exchange rate rallied by around half a cent yesterday to strike a 20-day high ahead of this morning’s British jobs report.
Data from the Eurozone yesterday showed that German investor morale increased unexpectedly this month, from 10.6 to 21.5, but it was not enough to lift the single currency, which remains drained by bets that the European Central Bank could look to loosen monetary policy further over the course of the year.
Calls from the IMF to rewrite Greece’s bailout package also weighed on the Euro as investors fretted over the potential of another flare up in the Eurozone debt crisis.
US Dollar
‘Cable’ appreciated by around a cent yesterday to hit its highest level since March.
The ‘Greenback’ suffered as US housing starts tumbled -8.8%, confounding expectations of -0.7%, and building permits shrunk -7.7%, disappointing forecasts of +2.0%. The terrible figures built upon a wave of pessimism that started last week when industrial and consumer confidence reports printed weakly. It is now anticipated that US GDP slowed considerably in the first three months of the year.
Meanwhile, Sterling benefitted from a new Telegraph phone poll giving the REMAIN camp a 52% to 43% lead in the run up to June’s EU referendum.
Canadian Dollar
Sterling lost ground to the Canadian Dollar yesterday as oil prices jumped in reaction to the workers’ strike in Kuwait, which is threatening to cut production -60%. The drop-off in output helped gloss over the disappointment of the Doha meeting, which concluded without oil producing nations agreeing on a deal to curb output.
Along with the surge in oil prices, risk sentiment was supported by relief that a) the Federal Reserve hasn’t tightened monetary policy aggressively so far in 2016 and b) the Chinese economy has crashed into a hard landing. This enhanced appetite for risk also bolstered the appeal of the commodity-correlated ‘Loonie’.
Australian Dollar
The Pound registered a half-cent daily gain versus the Australian Dollar yesterday as the latest EU exit poll boosted demand ahead of this morning’s UK labour market data. The ‘Aussie’ took heart from the uptick in oil prices and global risk sentiment but it was not enough to prevent Sterling powering ahead over the day.
New Zealand Dollar
The Pound to New Zealand Dollar exchange rate appreciated yesterday even though dairy prices rose at the latest GlobalDairyTrade auction. World dairy prices increased 3.8%, marking the second consecutive auction of higher prices, and this helped spur demand for the ‘Kiwi’ because the dairy sector is the nation’s largest export market.
Data Released
09:30 GBP ILO Unemployment Rate (3M) (FEB) Medium 5.1%
09:30 GBP Average Weekly Earnings (3M/YoY) (FEB) Medium 2.3%
09:30 GBP Jobless Claims Change (MAR) Medium -10.0k
15:00 USD Existing Home Sales (MoM) (MAR) Medium 3.5%