By Simon Eastman
With little data of note to contend with, the Pound managed to make some small gains over its major counterparties, as EU and US data failed to shine very bright.
The UK had nothing but Covid chat and cancelled Christmas parties to talk of, whilst the EU just saw some low level PPI figures plus the more noteworthy, unemployment figure, which did little to sway the euro either way as it came out unchanged and bang on forecast at 7.3 percent. Later on, the US released its jobless claims figures ahead of today where we see the holy grail of US data, in non-farm payrolls. The jobless claim was lower than expected, at 222,000 compared to the forecast 240,000. The pound was making early gains but ended up losing most following the data, as the dollar clawed back over the afternoons trading session. Over the day, GBP/EUR was up around half a cent, a relief to those euro buyers who have seen 2 cents knocked off the rates in the last week.
Whether this afternoons non-farm payrolls can have the usual effect on the markets is to be seen, given the recent comments from Fed Chief Jerome Powell, who has been testifying for the past couple of days and has had more sway on the greenback than the ecostats, by giving a strong indication they will be looking to tighten their monetary policy sooner rather than later. That news led to gains against the pound, plus more so, fresh highs on USD/EUR, although these have since fallen back somewhat.
Today we have a little more on the bones to go on, starting with a speech from the European Central Bank President, Christine Lagarde as the markets open. Markit services PMI comes out at 9am, followed at 9.30am by UK services PMI, followed by EU retail sales at 10am, so we could see a back and forth on GBP/EUR as the results are released one after the other.
After lunch, having digested the mornings figures, we head across the pond for the non-farm payrolls, average earnings and unemployment figures from the US and for any Loonie buyers or sellers, Canadian average earnings and unemployment data is also released at 1.30pm. The week closes with US services PMI, factory orders, ISM services PMI plus ISM employment, new orders and services figures, all high on the key US data releases.
A busy day to end a fairly quiet week data wise, so one should expect to see some market movement across the day. For those looking to buy with sterling, we have seen many clients disappointed by the big drop last week, so any upside may well be worth taking advantage of, whilst any more downside, might be an indicator to cut losses and jump in just in case we head further down to the lows seen earlier in the year when the last new variant of Covid had just been discovered.
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