Welcome to the Pure FX account of the latest changes in the foreign exchange rates.
This is intended as a brief guide to movements in the exchange rates over the weekend, to put you in the best position for when you change currencies.
Down, but not out it seems! The pound and euro claimed a full cent from the US dollar over the weekend, as a comeback in US job creation shows there’s life in the good ole US economy yet.
The United States created 163 thousand jobs in July, miles ahead of forecasts for 100 thousand new positions and more than double the 64 thousand improvement witnessed in June. This duly sent a wave of euphoria through the foreign exchange market, prompting investors to abandon their dollars in favour of ‘riskier’ currencies like the pound and euro. This happens whenever there’s a positive vibe in the global economy.
On the downside, these 163 thousand newly employed people weren’t enough to prevent a rise in the benchmark unemployment rate, which jumped +0.1% to 8.3%. This reflects the fact that, as Brian Jones, senior U.S. economist for Societe Generale SA notes, “Today’s numbers are better but not good enough.” The US needs to create jobs at a pace of 200 thousand a month to cut the unemployment rate, as well as keep pace with population growth.
Hence, this global euphoria may not last, which means the pound and euro could soon sink.
What’s more, the common currency also snatched a cent from the pound over the weekend, on some unexpectedly upbeat Eurozone data.
Retail sales on the continent jumped 0.1% in June, leaving forecasts for a flat 0.0% figure in the dust. Elsewhere too, the Eurozone services sector declined at a slower pace than forecast last month, sinking to just 47.9 on the latest PMI, against 47.6 forecasts.
This contributed to a feeling on the market that maybe, just maybe, Europe isn’t quite so sunk into the mire as everyone thinks. Hence the rising euro.
Sentix releases its latest consumer confidence index for the Eurozone this morning, while tonight the British Retail Consortium unveils the results of its July sales survey. Both releases will give us an insight into how confident consumers in the UK and Europe feel, which could help or hinder the pound and euro accordingly.
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