European unemployment increases as US markets resume trading post Sandy
01/Nov/2012 • Currency Updates•
The pound strengthened yesterday against 15 of its 16 major peers after the Swiss National Bank said it boosted the amount of pounds in its foreign exchange reserves. With the BoE due to announce on the 8 November whether or not it will raise another round of quantitative easing, there is a growing feeling that policy makers will reject this idea. Further propelling this idea, MPC official Charlie Bean hinted at a lack of effectiveness of further quantitative easing.
In other positive news, UK house prices dropped 0.9 percent year on year, which was smaller that the 1.2 percent drop forecast by economists. Sterling spiked to a 6 day high against the dollar.
There was a moderate drop in inflation yesterday in the eurozone from 2.6 percent in September year on year to 2.5 last month. However, there was concern over labour data released yesterday from the eurozone. According to Eurostat, 18.49 million people were without jobs in the euro area was up by 146,000. Spain’s jobless rate rose to 25.8 per cent with at Greece at 25.1.
Greece also revealed on Wednesday that it was going to overshoot its deficit and debt targets next year as a deeper than forecast recession takes hold. It still needs to push through 13.5 billion euros worth of economic reforms to satisfy EU and IMF lenders and secure more bailout money to avoid bankruptcy. There are mixed reports from a two hour conference call of ministers as to whether any process had been made to come up with a solution.
The dollar rebounded as foreign-exchange trading in the U.S. slowly returned to normal following Hurricane Sandy, with investors remaining cautious ahead of non-farm payroll data released this Friday. The greenback jumped against the yen and unwound most of its earlier declines against the euro seen during London trading hours. Market participants brought the dollar back into favour as they pulled away from bets on higher-yielding currencies ahead of the upcoming October U.S. jobs report, and the U.S. presidential election. CB consumer confidence and ISM Manufacturing PMI data will be released later today, with very little change expected from last months figures.