Dollar continues to claw back ground as German unemployment levels improve

Tom Tong04/Jan/2013Currency Updates

GBP

Sterling had a rough day yesterday, dropping against major currencies with more than a percent against the yen, almost solely on the release of negative PMI construction figures showing a lower-than-expected outcome. GBP/USD has been dropping since Wednesday, where it reached a new 12 month high, and the unexpected hawkish tone from FOMC Minutes yesterday has accelerated the downside in GBP.

Today we have a few numbers coming out with fairly moderate influence in which we see Markit Services PMI providing the most volatility.

EUR

On the release of the lowering bond yields in Spain a few days back we see some further improvement in the Spanish economy with really positive unemployment figures. Further for the euro we saw better unemployment numbers from Germany further supporting the positive feedback on the euro.

However, despite these positive numbers, we saw the euro trading lower against most currencies, hitting the lowest level against the Oceanic currencies (Aussie and New Zealand dollar) since the middle of December.

USD

The dollar soared against most currencies on positive employment figures that had risen more than 60% compared to November.Several FOMC (Federal Open Market Committee) members were pushing for an end to QE before the year is over, shown after the release of FOMC minutes last night. QE is considered a major source of liquidity which weakens the dollar.

This surprised the markets, resulting in a decline in both the oil futures market, in the gold and silver futures, and as mentioned to GBP. The most important news today is the non-farm payroll employment figures coming out at 13:30 GMT, with expectations of a rise compared to November. With positive employment numbers yesterday, there is a strong possibility that we see strong non-farm numbers today.

On another note, EUR/USD has fallen back to the lowest level since the middle of December, but with positive numbers we might see this be pushed even further back.

One of the biggest moves of the day was USD/DKK, going up almost a percent and a half, which mainly came as a result of the positive employment news in the US.

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Written by Tom Tong

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