Dear Subscriber, Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements. Headlines • UK trade deficit widens – Industrial production stagnates.
• German Production tanks – German surplus shrinks
• Canadian Unemployment falls – GBP/CAD down a cent.
• US Non-farms miss target– below-forecast score boosts risk sentiment.
Sterling The Pound stuttered slightly on Friday as the latest trade data from the Office for National Statistics showed that the deficit more than doubled during July. The British Trade Balance sunk to its lowest level since October 2012, at -£3.085 billion. The disappointing result was largely influenced by a pronounced drop in exports of UK goods and services to countries outside of the EU. Whilst reflecting a decidedly average outlook for world growth, the figures also bode badly for the UK's ambition to export its way to economic revival. Additionally, it was reported that Industrial Production in Britain stalled during July at 0.0%. Later in the afternoon Sterling was given a slight boost as the National Institute of Economic and Social Research predicted that UK GDP expanded by a whopping 0.9% in the three months to August.
Euro The Euro grew by a negligible 15 pips against the Pound on Friday as data out of the US failed to spur risk-off Fed taper bets. The Eurozone suffered from a shock miss of its own with German industrial Production coming in at a hugely disappointing -1.7% in July, compared to forecasts of -0.5%. The parallels continued as the Eurozone's flagship economy also suffered from a worse-than-expected Trade Balance report, which showed that the German trade surplus declined slightly during July from €17.0 billion to €16.1 billion.
US Dollar Sterling rallied by around half a cent to reach a fresh fortnightly high against the US Dollar on Friday as the latest batch of US labour market figures did little to support the view that Federal Reserve asset purchases will be slowed down during September. Coming in at 169,000, rather than the projected 180,000, the underwhelming US Non-farm Payrolls report was seen as another marker of mediocrity for the United States. With GDP growth fairly subdued and new jobs failing to materialise quickly, it is now slightly more realistic to speculate that the Fed may hold off on the tapering at this juncture. The report was especially damaging to US sentiment because it featured a severe downgrade of the previous two months' scores: June was revised down from 188,000 to 172,000 and July from 162,000 to 104,000. Surprisingly – given the soft NFP figures – the US Unemployment Rate tumbled by one percentage point to a 4.5-year low of 7.3%. However, it is likely that this seemingly positive reading was heavily influenced by a negative stimulus: namely that the participation rate fell to a staggering 35-year low of 63.2%. It seems that confidence in the world's largest economy's ability to provide jobs is continuing to wane.
Canadian Dollar The Canadian Dollar leaped higher by around a cent against the Pound on Friday as weak domestic UK data combined with decent Canadian numbers contrived to leave GBP/CAD unbid at the end of the week. Canadian Unemployment tumbled from 7.2% to 7.1% and the number of jobs created during August was reported to have soared way past the line of expectation to 59,2000. Rebounding from -39,4000, the number of people entering the workplace more than tripled the anticipated score of 20000
Australian Dollar With the threat of the Federal Reserve's risk-boosting cheap money stimulus programme being cooled down during September, in relation to Friday's poor NFP miss, things are looking slightly more rosy for perceived riskier currency such as the Australian Dollar. The 'Aussie' rallied by around a cent as traders digested the latest plot twist in the Fed easing saga.
New Zealand Dollar The Pound to New Zealand Dollar exchange rate slid by around -2.0 cents on Friday as markets, got their teeth into the latest US Non-farm Payrolls figures, and got their head around what it means for the possible slowdown of US stimulus.
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