After extending its rally to a two month high of $1.35 overnight, the euro’s rebound versus the dollar appears to have run into some resistance as traders look to take profits on recent moves. Risk appetite was also hit by a disappointing earnings report from Goldman Sachs (company earnings, not it’s employees...), as well as weak US housing data. Nonetheless, the EUR was also boosted by Germany’s Finance Ministry denying a newspaper report that it was working on a restructuring of Greek debt, whilst Portugal followed the Spanish with another successful bond sale. Despite this, concerns around the Eurozone periphery will remain, and it would seem the wider market clearly see this as the topside to the Euro’s rebound since the start of the year. th should start to get back to the underlying trend after seasonal distortions in recent weeks. Home sales and the Philadelphia Business Outlook also feature.
For the UK, yesterday was dominated by employment data. The claimant count in the UK fell by an unexpected 4,100 in December, while the drop in the previous month was revised to 3,200 compared to the initial estimate of 1,200. This suggests some improvement in UK labour market conditions with markets predicting a rise 1,500. However, while the number signing on did fall other data show the numbers out of work rising. The official international measure of unemployment (the ILO) showed a rise of 49,000 in the number out of work in the three months to November, reaching 2.5 million. The unemployment rate remained unchanged at 7.9%. Unemployment in the 16-24 age group reached 951,000 to give a jobless rate of 20.3%, the highest rate since records began in 1992. Meanwhile, the annual level of growth in average earnings (ex bonuses) was unchanged at 2.3%, easing some concerns about a build up of inflationary pressures the UK economy.
In the UK today, the latest CBI Industrial Trends Survey will give an early steer on activity in manufacturing at the start of the year. In the US, initial jobless claims for the week ending January 15 should start to get back to the underlying trend after seasonal distortions in recent weeks. Home sales and the Philadelphia Business Outlook also feature.
Posted in Daily Market News on May 30 2014