- Pound uptrends after disappointing US payrolls result – Major services result incoming
- Euro crumbles after USD recovers – Monday to bring Eurozone PMI and retail sales results
- US Dollar bounces back on factory data – US PMIs due on Tuesday
The Pound has closed off trading on a high note on Friday, having received a late boost by the lower-than-expected US change in non-farm payrolls (NFP) result; this initially sent demand for the Pound and the Euro up, though only Sterling’s rally has sustained itself. Looking ahead, the next UK data to come will arrive on Monday, when the extremely high-impact services PMI result for August is due to be announced.
The Euro has ended trading in a state of low demand, on account of earlier weak Eurozone data and a sudden reversal of opinion by US Dollar investors, that pushed the USD up and left the Euro in a state of negativity. A speech from European Central Bank (ECB) official Yves Mersch is due tomorrow, while on Monday, positively-predicted Eurozone retail sales and composite and services PMI results are due.
The US Dollar initially dropped during the afternoon when the NFP figure printed at 151k instead of the forecast 190k, only to rise shortly afterwards when the monthly factory orders for July rose from -1.8% to 1.9%. In addition to an incoming speech from Fed official Jeffrey Lacker, Monday will bring the US’s finalised services and composite PMIs for August, as well as the non-manufacturing PMI for the same month. Forecasts have been pessimistic in all three fields.
(Last updated September 2nd, 2016)
The Euro has been in low demand overall, following on from worse-than-expected Spanish unemployment change figures. For the US Dollar, tensions have been high among investors, who have yet to see whether the US’s August payrolls and unemployment figures will favour a possible near-term interest rate hike.
UK Economic News: Pound Dips after UK Construction PMI Fails to Return to Growth
The Pound has been damaged, rather than aided, by the last major piece of UK domestic data this week, despite it being broadly positive.
The result in question concerned the construction PMI for August, which rose from 45.9 points to 49.2, a better result than the forecast 46.6 figure.
Most of the investor disinterest to this response likely stemmed from the sector not reaching the plus-50 growth range, as was seen on Thursday with the August manufacturing PMI outcome.
In response to the news, Lloyds Managing Director and Global Head of Infrastructure and Energy said;
‘The order books of larger firms, many of which benefit from diversified revenue streams, appear to be in good shape, while several have either increased or restored their dividends. That said, anecdotal evidence indicates those further down the chain, such as mid-tier contractors …are less bullish and more likely to adopt a ‘wait and see’ approach’.
Euro Softens while US Dollar Firmness Comes ahead of High-Impact US Jobs Data
The Euro has failed to make much in the way of positive progress today, owing to poor results from the day’s limited amount of Eurozone ecostats.
While Spain’s unemployment change for August had been forecast to show a drop of -49.7k persons, the reality saw a damaging rise of 14.4k recorded.
Adding insult to injury, Italy’s finalised GDP growth rate results for Q2 fell on the quarter and the year, though this was in line with forecasts.
For the US, the day so far has been uneventful, with investors remaining in a state of tension before the upcoming US ecostats that could influence whether the Fed freezes or hikes the US interest rate in September.
The latest US economic news has come from the Fed, with Loretta Mester stating that the conditions are right for a series of small but continuous US interest rate hikes. While such hawkishness would usually boost the US Dollar, its proximity to a pair of extremely important US ecostats has diminished any positive effect considerably.
Future GBP, EUR, USD Forecast: US Payrolls due Shortly, Major UK Services PMI Out Monday
The next major data to watch out for will come from the US, when the afternoon brings the July balance of trade and August change in non-farm payrolls and unemployment rate results.
The current trade deficit is expected to rise on the month, while payrolls have a downward shift expected from the previous 255k to 190k. At the time of writing, the unemployment rate was expected to remain unchanged at 4.9%.
Looking further ahead, Monday will open for the UK with the services PMI result for August, which is forecast to rise, though not out of contraction. As services is the UK’s largest economic sector, a positive result of over 50 points would likely send the Pound rallying against both the Euro and US Dollar.
Current GBP, EUR, USD Exchange Rates
The Pound Euro (GBP EUR) exchange rate is trending in the region of 1.1867 and the Euro Pound (EUR GBP) exchange rate is trending in the region of 0.8429 today.
The Pound US Dollar (GBP USD) exchange rate is trending in the region of 1.3268 and the US Dollar Pound (USD GBP) exchange rate is trending in the region of 0.7538 today.
The Euro US Dollar (EUR USD) exchange rate is trending in the region of 1.1182 and the US Dollar Euro (USD EUR) exchange rate is trending in the region of 0.8946 today.