Super Thursday to cause Indian Summer?
After a disappointing week for the Pound versus the Dollar, the pair looks to have picked up some pace this morning in favour of GBP. Bouncing off lows from the back end of last week, Sterling has found fresh buyers today, posting moderate gains and pushing through a key psychological level of resistance. Many had expected the Pound to push ahead on Friday as analysts forecast that employment data from the US would not be positive.
They were right; US Non-Farm payroll data came in significantly short of consensus which would normally be to the detriment to the Greenback, especially considering how hotly tipped it was to be a fundamental piece of the US interest rate jigsaw. Despite the published figure being well short, the overall employment rate still managed to decrease to 5.1%, providing the USD with some respite and giving the Dollar continued momentum late on Friday.
The Pound’s uplift this morning has not happened as a result of positive UK data, but more likely geared toward the new “risk on” appetite as European stocks suffer. Overall the Dollar is broadly seen as the stronger currency in the market right now and it is unlikely to surprise anybody that the Pound has been able to retrace its steps this early in the trading week. A likely scenario is that market participants are taking positions ahead of the much anticipated “Super Thursday” when we have the release of a host of tier one data from the UK, specifically from the Bank of England (BoE). Mark Carney and co will publish the latest vote results with regard to the interest rate along with the BoE meeting minutes and accompanying Monetary Policy Statement.
With China put on the back burner as a source of news thanks their two-day public holiday last week, global stock markets have been given a much-needed breather. With no news on the economic front Chinese equities permitted the FTSE 100 and other bourses to recover some of their losses.
The rising trend in global risk sentiment seemed to prefer higher-yielding Commodity Currencies such as the Australian Dollar, the New Zealand Dollar and the Canadian Dollar. These currencies were all posting substantial moves higher against the Pound off their intraday lows.
The improved levels of global appetite for risk were fuelled further by the European Central Bank (ECB) President Mario Draghi who used his monthly platform to lower the ECB’s forecast for inflation. Draghi’s message allowed Commodity Dollars’ to improve against the Pound. The Pound Sterling fell against the Australian Dollar and the New Zealand Dollar as a consequence.