Eurozone unemployment rate increases as UK Christmas retail sales figures also disappointing

Tom Tong09/Jan/2013Currency Updates

USD

It has been quiet regarding data, with the dollar still feeling the effects of the recent fiscal cliff aversion. There has also been talk, somewhat ludicrously, by policy analysts over the possibility of a “trillion-dollar platinum coin”, as a way to “print” more money to cover national debt.

The dollar bounced back against the yen in Asian trading this morning with the offering a good opportunity to buy the greenback for investors who missed earlier chances amid the dollar’s rapid rise since last year.

A raft of dollar purchases came from a variety of market participants including importers, Japanese retail investors and longer-term fund investors overseas.

EUR

The euro-zone unemployment rate rose to a fresh high in November as a net 113,000 people lost their jobs, leaving record numbers without work.

Despite the steady erosion of jobs across the 17-country currency area over the past 18 months, retail sales rose in November for the first time since July, and consumer confidence picked up slightly in December.

Euro-zone business confidence also strengthened in the final month of 2012, according to a monthly survey by the European Commission. Confidence levels remain weak by historic standards, however, and haven’t yet signalled a pick up in economic activity, though they do suggest further weakening is unlikely.

The loosening of liquidity rules due to come into effect on banks raises hopes among some analysts to a recovery of lending the eurozone.

The Basel Committee on Banking Supervision announced over the weekend that it would give banks more time to meet global liquidity rules, phasing them into force from 2015. Originally banks would have had to hold essentially cash, central bank deposits and high-rated government and corporate bonds to meet the so-called Liquidity Coverage Ratio.

GBP

Sterling fell to a month low versus its major counterparts, following reports that retail sales slowed in December, furthering signs that Britain’s economy is lagging. Retail-sales growth at U.K. stores open at least a year slowed to 0.3 percent last month from a year earlier, from 0.4 percent in November, the British Retail Consortium said.

Data showed that Christmas sales barely rose, fuelling worries the economy may have contracted in the fourth quarter of 2012.A separate survey showing a broad improvement in business morale in the last quarter failed to lift the pound. Fears also remain that a sovereign downgrade by one of the major credit ratings agencies is still looming. Market players also warned the pound could do badly relative to the dollar and the euro — both of which could also struggle this year, as worries about weak UK growth undermine its appeal as a safe haven from the euro zone debt crisis.

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Written by Tom Tong

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