It’s been a session of contrasting fortunes for major currencies.
The US Dollar has on the whole showed little reaction to better-than-expected US labour market data for November. Non-farm employment rose by 266,000 – the strongest print this year – and weekly earnings growth was broadly unchanged at 3.1% yoy.
The Euro, which earlier in the week had appreciated to a one-month high, has given back most of its recent gains following the release of another weak set of German macro data. Industrial output in the EU’s largest economy contracted 1.7% mom in October, raising the risk that GDP growth could contract in Q4. Similarly, the Swiss Franc has weakened three sessions in a row, perhaps unsurprisingly given that the Swiss economy is closely tied to the broader European economic cycle.
Sterling has had a game of 2 halves, weakness this morning, however strength this afternoon – breaking through another 52 week high vis-a-vis the Euro. Markets still seem reasonably confident that the ruling Conservative Party will secure a parliamentary majority at the 12th December general election. History suggests that some caution is warranted when making such forecasts.
While the Australian Dollar has been treading water today, the Kiwi Dollar is up for the sixth consecutive session and up 1.8% since last Friday. The Reserve Bank of New Zealand yesterday morning released details of its new capital requirements for commercial banks, which are arguably less severe than markets had anticipated. Moreover, New Zealand’s rising trade surplus is seemingly providing further support for the currency.
