Sterling falls as North American data leads the way – 10th July 2017
Sterling falls as North American data leads the way – 10th July 2017
It wasn’t actually that surprising was it that US President Trump distanced himself from other world leaders at the G20 summit in Hamburg over the weekend however, more surprising was that it had minimal impact on exchange rates. US and UK economic data did though.
On Friday, the Halifax bank reported a 1.0% monthly fall for house prices which, along with UK trade and output figures, contributed to a negative cloud which hung over Sterling. Manufacturing production was 0.4% higher which was lower than the previous month while industrial output was 0.2% lower on the year. At the same time the ONS reported a widening of Britain’s trade deficit. The gap was actually bigger in May than it had been in the same month last year, prior to Sterling’s referendum-inspired plunge.
There was nothing in the numbers for investor to like: the supposed ability of a “more competitive” Sterling to boost activity and trade was nowhere in evidence and the possibility of an early interest rate increase faded even further. Sterling fell an average of 0.7% on the day, sharing last place with the Japanese Yen. Its losses included half a Euro cent and three quarters of a US cent
Employment data from North America beat almost all expectations. The US Dollar strengthened slightly on the news while the Canadian Dollar forged ahead for an average daily gain of 1.4% against the other dozen most actively-traded currencies. A 222,000 increase in US non-farm payrolls beat forecast by 43,000 and revisions to previous month added a further 47,000 jobs. The two dampeners were an uptick in unemployment to 4.5% and slow earnings growth.
There were no such caveats attached to the Canadian figures. Unemployment was down to 6.5% and 45,000 new jobs were created in June. The numbers fed a suspicion that the Bank of Canada will take interest rates higher on Wednesday, so the Canadian Dollar went up. It added two thirds of a US cent and strengthened by two and a quarter cents against Sterling.
There is little on today’s data agenda and none of it is likely to have much impact on the major currencies. Euroland investor confidence this morning will be followed by Greek inflation and industrial production. There is nothing of any consequence from the United States.