European Session – Sterling weak after UK unemployment rises
February 19, 2014 2:18 pm
The dominant theme during the European session was sterling weakness as the currency was hit by an unexpected drop in the UK unemployment rate.
The official ILO headline unemployment figure edged up to 7.2% in the October- December period from a previous reading of 7.1%. The reading was forecast to remain unchanged. Meanwhile, the claimant count, which is the number of people claiming unemployment benefits, fell by more than expected in January by 27,600, as economists expected a decline of 20,000. This had no impact on the markets which preferred to focus on the unemployment rate itself. The rise in the rate may lead to market speculation that the BOE may see little reason to consider tighter policy and higher rates soon.
The Bank of England’s MPC minutes did not reveal anything new and was mainly a repetition of the views expressed in last week’s BOE Inflation Report.
Following the news releases out of the UK, the pound reversed its early session gains versus the dollar and fell from a high of 1.6733 to a low of 1.6636, ending the session at 1.6671 with a 0.10% loss. The euro strengthened versus the pound to gain 0.05% and finished at 0.8245.
Against the dollar, the euro eased back from a seven-week high of 1.3772 hit in Asia today, fading the rally after being buoyed by yesterday’s record Eurozone current account surplus. The euro declined to a low of 1.3743 before ending the European session with a 0.06% loss at 1.3746. However, weak US housing data hurt the dollar and paused the euro’s decline.
US housing starts recorded their biggest drop in almost three years in January. While the recent bad weather could be blamed for the weak numbers, there is rising concern there might be some underlying weakness in the housing market as permits record a third month of declines and the housing market in warmer climates like Miami, Las Vegas and Phoenix were also on the decline.
The dollar spent most of the Europa session trading below the key 102.00 yen level. After dipping to a low of 101.84 the greenback bounced back to end the session at 102.09 with a 0.06% loss against the yen.
Looking ahead, the dollar could come under pressure again following the Fed minutes tonight. Markets will focus to see if there will be any new insight into the US growth outlook although it is expected the minutes will likely reiterate Yellen’s message.
The dominant theme during the European session was sterling weakness as the currency was hit by an unexpected drop in the UK unemployment rate.
The official ILO headline unemployment figure edged up to 7.2% in the October- December period from a previous reading of 7.1%. The reading was forecast to remain unchanged. Meanwhile, the claimant count, which is the number of people claiming unemployment benefits, fell by more than expected in January by 27,600, as economists expected a decline of 20,000. This had no impact on the markets which preferred to focus on the unemployment rate itself. The rise in the rate may lead to market speculation that the BOE may see little reason to consider tighter policy and higher rates soon.
The Bank of England’s MPC minutes did not reveal anything new and was mainly a repetition of the views expressed in last week’s BOE Inflation Report.
Following the news releases out of the UK, the pound reversed its early session gains versus the dollar and fell from a high of 1.6733 to a low of 1.6636, ending the session at 1.6671 with a 0.10% loss. The euro strengthened versus the pound to gain 0.05% and finished at 0.8245.
Against the dollar, the euro eased back from a seven-week high of 1.3772 hit in Asia today, fading the rally after being buoyed by yesterday’s record Eurozone current account surplus. The euro declined to a low of 1.3743 before ending the European session with a 0.06% loss at 1.3746. However, weak US housing data hurt the dollar and paused the euro’s decline.
US housing starts recorded their biggest drop in almost three years in January. While the recent bad weather could be blamed for the weak numbers, there is rising concern there might be some underlying weakness in the housing market as permits record a third month of declines and the housing market in warmer climates like Miami, Las Vegas and Phoenix were also on the decline.
The dollar spent most of the Europa session trading below the key 102.00 yen level. After dipping to a low of 101.84 the greenback bounced back to end the session at 102.09 with a 0.06% loss against the yen.
Looking ahead, the dollar could come under pressure again following the Fed minutes tonight. Markets will focus to see if there will be any new insight into the US growth outlook although it is expected the minutes will likely reiterate Yellen’s message.
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