Whats happening to the dollar as US jobless rate falls to its lowest since Obama took office? Oct 8By james tweed • Oct 8th, 2012 • Category: Currency
Significant items this week:
Monday 8th Oct US – Bank Holiday
UK – Conservative Party conference for next 3 days.
Tues 9th Oct EU – ECB president makes speech, ECB announces CPI
UK – Manufacturing and Industrial production, Trade Balance, GDP for 3 months to September
Wed 10th Oct EU – Industrial Output
US – Fed publishes Beige Book
Thurs 11th Oct EU – ECB monthly report, Unemployment rate
US – Trade Balance
Fri 12 Oct EU – Industrial production
US – PPI, Michigan consumer sentiment index
Thank you for downloading the foreign exchange market report podcast for October 8th from Coracle Online and Crossbar fx.
The big news last week was that the US jobless rate fell to its lowest since Obama took office, falling to 7.8%, with the non-farm payrolls coming in slightly better than expected. You could be forgiven for thinking this would be positive news for the dollar, and that the currency might strengthen. Initially however, no. It meant the markets had confidence in the US economy and re-affirmed their belief that things can only get better. This makes them happier to invest elsewhere in riskier assets and by close of play on Friday, and again on Monday morning, that’s no longer the case. The USD has now strengthened against Sterling and against the Yen and the indeed the Euro as another headline comes along and suggests that although the US may be feeling positive the feeling elsewhere isn’t reciprocated.
In the Eurozone there is growing expectation that the Greeks will fudge their figures to secure a funding package for the next two years from the IMF and the ECB. They will of course be given time and resources, a ‘Grexit’ is too terrifying a thought and funds are already leaving Southern member states to Northern ones extenuating the crisis. If they go who else lines up: Spain, Italy?
The Gold price quietly keeps rising as more dollars are printed in “QE infinity”, and inflation creeps into the periphery vision of investors. Its getting boring writing about it, but the foreign currency markets are still undecided where this is all going to end up, as indeed are the equity markets. Everyone is muddling along, looking for good news, and trying not to let the bad news get in the way. As long as no one is actually calling it, the ebbs and flows look set to continue.
In the UK the debate continues as to whether we are technically in recession. The British Chamber of Commerce said that our economy actually grew last quarter, which is the opposite to what the ONS says. The next set of GDP figures is out Tuesday and the Chancellor will outline what more he intends to do this week, and the PM talks tough about vetoing the European open cheque book policy.
Thanks for listening