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May 11th: Highlights
- Markets react with euphoria following shock UK election
- Sterling now looks beyond elections
- US Dollar stabilises
- EUR/USD down 0.38%
- Kiwi tumbles over 1% against greenback
The pound is continuing its strong charge against both the greenback and the euro. GBPUSD still has support in the 1.54 area but the pair seems challenged to break the resistance that has formed around 1.555. That level marks February’s high point and the previous charge at the end of April failed to break that level. GBPEUR is currently trading around 1.3822.
As we saw, the shock election result sent sterling soaring, UK government bonds rally and the FTSE rose by more than 2%. The question everyone is asking, can this momentum continue? With the post election dust settling, it will be a very interesting week on the data front. Tuesday will see a batch of important manufacturing data for sterling. The Office for National Statistics will release its report on manufacturing and industrial production. We will also see the first quarter GDP estimate. The NIESR had already lowered its forecast last week.
The euro slid against the US dollar on Monday, extending its pullback from last week’s two-month highs. Investors will be closely watching yet another meeting today between Euro group finance ministers and Greece officials ahead of the IMF repayment, due tomorrow. EURUSD was down 0.38% to 1.1158, off the two month highs of 1.1391 set last Thursday.
In the US, nonfarm payrolls report broadly met expectations. Data from the Department of Labor show that the US economy successfully created 223k new jobs in April. The report was just one thousand short of the consensus estimate. Meanwhile, the poor employment reading for March saw a downward revision from 126k to just 85k.
The unemployment rate dropped from 5.5% to 5.4%. The services sector saw strong growth but jobs were lost in the mining sector. The average hourly earnings, which have seen persistently sluggish growth, also missed targets by only growing 0.1% on the month to April.
The New Zealand dollar tumbled over 1% to two-month lows against the US Dollar in today’s early session, as demand for the greenback remained broadly supported despite some of the more disappointing U.S. employment data that emerged on Friday.
The kiwi dollar was also trading lower against the Australian dollar, with AUDNZD gaining 0.91% to 1.0685.
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