Sterling
The Pound performed well on Friday, the final day of a week in which all three British private sector survey’s printed more optimistically than expected.
Last week manufacturing hit a three-year high, construction a four-month peak and the dominant services sector struck its second best level since 2015. The upbeat reports went some of the way to assuaging fears of an imminent slowdown and convinced some traders that the Bank of England could be moved to start raising rates in the foreseeable future. Having said that, cooling consumer spending patterns remain a key concern and BoE Governor Mark Carney has not shown much desire to start tightening policy while Brexit uncertainty reigns.
Euro
The Pound to Euro exchange rate softened a little bit on Sunday evening following news that centrist Emmanuel Macron had beaten far-right Marine Le Pen in the French Presidential elections. Macron’s landslide victory ensures that the Eurozone’s second-biggest economy will not be leaving the currency bloc anytime soon. Investors cheered the news, which was seen as a positive signal for the future of the European project, however, the result was largely priced-into the single currency and market moves were muted.
US Dollar
‘Cable’ traded within 1 pip of its highest level since last September on Friday.
The US non-farm payrolls report printed at 211,000 for April, marking an encouraging improvement on March’s negatively revised score of 79,000. The unemployment rate also impressed, falling unexpectedly from 4.6% to a 10-year low of 4.5%. Traders reacted by upping their bets for a Federal Reserve rate hike in June, however, the upbeat news did not translate into stronger demand for the ‘Greenback’.
Canadian Dollar
Sterling hit a new 10-month high versus the Canadian Dollar on Friday but GBP/CAD gave up its gains when Canadian labour data showed that unemployment tumbled from 6.7% to 6.5% in April. The result surprised traders, who had anticipated a hold at 6.7%, while demand for the commodity-correlated ‘Loonie’ was also boosted by a rise in oil prices. Crude rallied in response to a drop of 6.5% in Chinese oil production in the first quarter.
Australian Dollar
The Pound to Australian Dollar exchange rate appreciated by around 70 pips on Friday to strike a new eight-month high. Markets sold the ‘Aussie’ Dollar following the latest statement from the Reserve Bank of Australia, which featured a slight upgrade to GDP forecasts but little desire to start raising interest rates anytime soon.
New Zealand Dollar
Helped by a rise in Reserve Bank of New Zealand inflation expectations, the ‘Kiwi’ Dollar strengthened by around half a cent against the Pound on Friday. Rate hike bets increased, and subsequently so did demand for the Antipodean currency, as two-year inflation expectations jumped from 1.92% to 2.17%.
No key ecostats due for releases today.