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Best UK employment rate since platform shoes and miniskirts were in vogue

Best UK employment rate since platform shoes and miniskirts were in vogue

On the Sterling front, more gains were made versus the Euro on the release of Wage and Inflation data at 9.30am, jumping 0.6% – from 1.4080 to 1.4169. UK unemployment unexpectedly dropped to a new low of 5.3% in September data, down from 5.4% in August and July’s 5.5%. The employment rate, meanwhile, rose to 73.7% the highest since records began in 1971.

Despite this, wage data disappointed: the ex-bonus average household pay packet rose 2.5% year-on-year in the three months to September, down from the 2.8% increase of August, while the with-bonus figure rose 3.0% year-on-year, unchanged from August and shy of the median forecast of 3.2%. The weaker wage data has been the main takeaway for markets, though with inflation fractionally negative, incomes continue to trend firmly upwards in real terms. The October claimant count has been somewhat overshadowed on this occasion, coming in with a rise of 3.3k, slightly worse than the 1.4k forecast, and the claimant count rate remained unchanged at 2.3%.

The USD was at the mercy of the markets yesterday as market participants Stateside paid their respects on Veterans Day. With the markets closed for trading most major currencies were able to pick up a little momentum versus the Greenback. The losses versus Sterling were the most notable, as the Dollar saw close to 0.7% wiped off of its value.

Given that the markets were closed, we didn’t have anything to look to on the data front. Today, however, is a different story as we have a number of FED members speaking later on – starting with Bullard at 2:15pm, shortly followed by FED Chair Janet Yellen at 2:30pm. Although a number of market participants will be looking for clues surrounding monetary policy and interest rates, we aren’t expecting a great deal to come from these speeches.

The highlight from the US will come in the form of initial and continuing jobless claims – following last week’s momentum changing jobs data…a little more excitement surrounds this release and it could be what the Dollar needs to pull back yesterday’s losses.

Euro had much of the same trading predominantly sideways yesterday as the thin economic calendar isn’t rocking the boat much this week. We may experience some waves later today however as European Central Bank President Mario Draghi continues with the second day of his press conference. His comments on the current state of the European economy are likely to determine short term price action.

Any dovish comments are likely to further weaken the Euro. Industrial Production figures are also released for the Eurozone today, with the markets expecting a slight improvement from 0.9% to 1.3% year-on-year.

Data to watch: 10am Euro Industrial production & 1.30 pm US Initial Jobless Claims

Video to watch: Our very own 360 FX Manager, Jamie Power, gives the lowdown on GBP/USD for Swiss Forex Bank Dukascopy.

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