US Payrolls Data Proves Better than Predicted Today to Bolster US Dollar (USD) as Euro (EUR) Slumps
Investors were surprised this afternoon as the US Change in Non-Farm Payrolls report proved better than forecast, with 271,00 new jobs being added to the economy instead of the forecast 185,000. The bullish result was seen to dramatically increase the chances of the Federal Open Market Committee (FOMC) voting to increase interest rates at the December policy meeting. In response, the US Dollar (USD) surged across the board, conversely sending the Euro (EUR) into a strong downtrend.
The appeal of the Pound (GBP) has remained limited this morning, with traders disappointed by the dovishness of the Bank of England’s (BoE) ‘Super Thursday’.
Pound (GBP) on Downtrend Today after Dovish Bank of England (BoE) Inflation Report Reduces Odds of 2016 Interest Rate Rise
After traders’ hopes had been raised by a better-than-expected UK Services PMI they were ultimately dashed by the release of a surprisingly dovish Bank of England (BoE) Inflation Report. Markets were also a little displeased to hear that policymakers had voted 8-1 to leave interest rates at their current low of 0.50%, as the chances of a 2016 rate hike appear to have receded significantly. With inflation not expected to pick up particularly over the coming year the strength of the domestic economy was brought into question, despite positive showings on recent data. Naturally this all saw the Pound (GBP) plunge across the board, holding on a strong downtrend ahead of this morning’s Industrial and Manufacturing Production figures.
German Industrial Production Slips Lower to Erode Euro (EUR) Demand
Eurozone data has not been offering particular support for the single currency (EUR) ahead of the weekend, as yesterday’s German Factory Orders unexpectedly contracted on both the month and the year. This news was not especially welcome as confidence in the Eurozone’s economic powerhouse had already been hit by the admission that Volkswagen had rigged carbon dioxide emission results in 800,000 vehicles. As Germany’s Industrial Production reading also fell more sharply than anticipated on Friday, from 2.7% to 0.2%, pundits are not particularly inclined to favour the common currency.
European Central Bank (ECB) President Mario Draghi has continued to iterate the likelihood of additional quantitative easing measures being implemented in December, weighing on the outlook of the Euro further.
US Dollar Currency News: USD Trending Cautiously Today in advance of US Change in Non-Farm Payrolls Data
Ahead of today’s major Change in Non-Farm Payrolls data release the US Dollar (USD) has been on a more cautious trend, as investors await the latest gauge of domestic employment. Given the importance that the Federal Open Market Committee (FOMC) place on this particular figure traders are equally hoping to get a better idea of the odds of an imminent Fed interest rate rise. Although forecasts predict more healthy growth of 184,000 jobs on the month this remains below the more bullish rate of expansion seen in 2014, with any shortfall likely to have a strongly detrimental impact upon the ‘Greenback’. Following a greater increase than forecast in both Initial and Continuing Jobless Claims on Thursday, however, sentiment remains cautiously optimistic.
Current GBP, EUR, USD Exchange Rates
At time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was down in the region of 1.3951, while the Pound Sterling to US Dollar (GBP/USD) pairing was slumped around 1.5168. Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate was on a downtrend in the range of 1.0870.