Sterling
On Friday it was announced that new UK car sales rose 2% in April to a monthly total of 189,505. The upbeat report gave Sterling a small boost as it was seen to convey a mild optimism among consumers. With just under 8,000 sales, the Ford Fiesta raced to the front of the pack – ahead of the second placed Volkswagen Golf with 5,600 sales.
However, jittery investors were loathe to send Sterling much higher against the majors as ‘Brexit’ fears began to creep back to the fore.
Euro
The Pound to Euro exchange rate tumbled by around a third of a cent on Friday as demand for the single currency was bolstered by the latest US labour market report. Traders reacted to some lower-than-anticipated US job creation figures by buying into the Euro in the hope that the single currency may rise over the next few months if American policymakers choose not to raise interest rates.
Demand for the common currency could remain sturdy during today’s session if Sentix’s Eurozone investor confidence survey shows, as expected, that sentiment increased from 5.7 to 6.0 at the start of May.
US Dollar
Friday’s highly awaited US non-farm payrolls report turned out to be a mixed bag for the American economy and the US Dollar.
The headline NFP job creation figure came in at just 160,000, significantly lower than forecasts of 200,000, and the unemployment rate confounded expectations of a fall to 4.9% by remaining at 5.0%. These downbeat figures put pressure on the ‘Greenback’ initially, but investors took heart from the wages section of the report, which showed that average hourly earnings accelerated from 2.3% to 2.5% in April.
With the bears focussing on the soft jobs numbers and the bulls honing in on the encouraging wage growth figures, the US Dollar was subject to volatility in currency markets following the NFP report. However, it seems the bulls moved with more conviction where GBP/USD was concerned because the Pound ended for the day around -60 pips lower.
Canadian Dollar
Despite a surprise -2,100 job loss during April, the Canadian unemployment rate beat estimates of an increase and remained at 7.1% last month, it was reported on Friday. The neutral data was accompanied by a downbeat manufacturing PMI print of 50.6, which confounded expectations of 52.5.
GBP/CAD remained fairly flat on the day despite news that the wildfire in Canada’s Alberta province had advanced to around 700 square miles. The fire, which has forced over 100,000 Canadians to evacuate their homes, is now thought to have receded slightly to around 621 square miles of flames.
Australian Dollar
The Pound to Australian Dollar exchange rate rallied over 300 pips on Friday to strike a new 75-day high in reaction to a dovish statement from the Reserve Bank of Australia.
The RBA’s quarterly monetary policy statement saw the central bank cut its 2016 inflation forecasts from 2.3% to 1.2%. This move led to a massive sell-off in the ‘Aussie’ as investors began envisioning further rate cuts from the RBA. The announcement compounded pressure on the ‘Aussie’ following Tuesday’s surprise RBA rate cut.
New Zealand Dollar
Sterling ticked slightly higher against the New Zealand Dollar on Friday as NZD was dragged lower by bets of looser policy across the Tasman Sea. Markets took the view that the Reserve Bank of New Zealand would struggle to keep rates on hold for long if the RBA embarked on an aggressive easing policy and the ‘Kiwi’ depreciated as Antipodean rate cut bets flourished.
Data Released
09:30 EUR Eurozone Sentix Investor Confidence (MAY) Medium 6.0
13:15 CAD Housing Starts (APR) Medium 193.0k