Sterling Up To Monthly Highs As Sentiment Shifts
The UK jobs data reinforced unease over labour market trends, especially a sharp increase in redundancies. An extension of the furlough scheme provided an element of relief with Sterling also protected by optimism that vaccine developments would help provide a key lifeline for the economy whilst markets remain optimistic that progress on the trade front with the EU could come by the end of the week,
Global risk appetite held firm, strengthening Sterling to monthly highs above 1.3250 against the Dollar and 1.1255 against the Euro before a slight correction.
UK GDP data will be released today with the potential for a strong rebound in the third quarter offset by underlying concerns over the fourth quarter relapse. Sterling again holds firm this morning with robust risk appetite still an important element in providing support with the UK currency currently trading around the 1.3285 against the Dollar and 1.1265 against the Euro.
The US NFIB small-business confidence index was unchanged at 104.0 for October and above consensus forecasts of 102.2. The JOLTS recorded a small increase in job-openings to 6.44mn from 6.35mn the previous month, but slightly below consensus forecasts. Elsewhere, the IBD consumer confidence index declined to 50.0 for November from 55.2 previously. Data had little impact given the focus on coronavirus developments.
US yields edged lower after the US open which also limited fresh Dollar support whilst a limited correction in commodity currencies which helped protect the US currency.
The German ZEW economic sentiment index declined to 39.0 for November from 56.1 the previous month and below consensus forecasts of 41.8 while the current conditions index edged weaker to -64.5 from -59.5 in October. The wider Eurozone sentiment index also dipped to 32.8 for November from 52.3 the previous month.
The Euro was unable to make any headway yesterday and dipped to lows below 1.1780 amid short-term unease over Eurozone developments. Soon after the US open, the European Parliament and EU governments reached a deal on budgets up to 2027 which included a 750bn Euro recovery package. The agreement boosted confidence in the Eurozone recovery outlook which also cushioned the single currency.
ECB President Christine Lagarde is also speaking later today, with her tone and rhetoric being watched closely which could provide a directional bias to the Euro.
Data to watch
13:00 – EUR – ECB President Lagarde Speaks