By Nick Harrison
The shock US jobs data that came out last Friday was the cause for great concern in the FX market as investors saw the much worse than expected employment data as a potential catalyst for a US recession. The Pound fell from its 2 year high against the Euro and USD as investors plunged their money into the safe haven USD. The sentiment seems to have calmed a little and the panic, for the time being, appears to have abated. The US announced its jobless claims data yesterday and this steadied the market as the claims came in less than expected – in fact the lowest level in some time.
There has been very little economic data at the end of this week, so the market has evened itself out and looks to continue this trend until the weekend. Next week though, is a very different story. After the recent threat of a US recession loomed, investors will give a huge focus on the US data that is due to be released next week. We have the US small business optimism survey, the US CPI inflation release, US retail sales and further US unemployment data all to digest. Good numbers here could see a rally of riskier currencies and the Pound, but equally any negative data could see the Pound sink as investors plunge their money back into the safe haven USD again. Surprise figures in retail sales have moved the FX market in recent times, so this coupled with the US inflation data could see next week be a significant one as far as Sterling and the other major currencies is concerned.
As if the US data wasn’t enough to digest, we also have some significant data being released here in the UK. Tuesday sees the UK claimant count data released, followed by Wednesday’s year-on-year CPI inflation data, then on Thursday we see the UK month-on-month GDP figure released with Friday’s UK retail sales data finishing the week.
So, the message is clear! Next week will no doubt see some volatility in the FX market. Will the Great British Pound continue its recent slump, or will we see some risk appetite back in the market again and enjoy the 2 year highs we were seeing until last Friday? Our currency consultants will share all these updates with you and help you make informed decisions about how to manage your FX risk, so do reach out to us and we will keep you updated on how next week pans out.
Data Next Week
TUESDAY
GBP Claimant Count – 7am
US Production Price Index – 1.30pm
WEDNESDAY
UK year-on-year CPI – 7am
US month-on-month CPI – 1.30pm
THURSDAY
UK GDP – 7am
US Retail Sales & unemployment – 1.30pm
FRIDAY
UK Retail Sales – 7am