UK Manufacturing and US Non-Farms close out the week

1 April, 2016

Tom Arnold

This week has been a relatively uneventful one on the currency markets, with the Easter bank holidays in the UK meaning a late start to trading, an almost complete lack of critical data until yesterday and then some fairly innocuous figures on the data there has been, giving us not a great deal of major currency pair movement.

The biggest moves have come in the form of a weakening Dollar as a result of Janet Yellen’s negative comments earlier this week about US growth, and a weakening Pound as a result of an increasing trade deficit yesterday – the UK has carried a trade deficit for decades and is normally quite happy with its net importer status due to other factors, but with a stronger Pound over the last year or so, exports have been worse than usual and so the deficit increased above expectations causing a pretty large drop off in Sterling strength over the course of yesterday. The Euro has muddled through some fairly uninspiring data and managed to take advantage of both of the other major’s weakening to finish as the week’s winner.

Today sees a few more important data releases and as a result we could see a busy end to the week. We have already seen better than anticipated house price increases in the UK this morning thanks to the Nationwide survey, and this will be followed in the next hour by Markit manufacturing numbers for much of Europe and the UK. With the Tata steel situation very much in the news, you can expect the UK number to be closely watched and with a slight improvement on last month’s figure mooted, it is either a potential boost for the Pound or a pitfall depending on which way it goes. UK manufacturing has failed to impress for the last few months, so despite the optimism from analysts it would take a strong will to back the Pound on this one.

Next up is European unemployment; with solid numbers from Germany yesterday this might be a bit of a non-event unless the “no change” that is expected proves to be wrong in which case the Euro could react. US unemployment is the focus this afternoon in the form of the ever important Non-Farm Payrolls. US economic figures have failed to impress for the last couple of months so the markets will have a close eye on this to see if the jobs figures impresses. A failure to meet the 205,000 jobs that are expected to have been created, could mean further pressure on the Dollar which would likely cause a surge in Euro strength as a result, so even though this is a US release, the knock on effect for any Euro buyers could be significant.

With a busy day ahead, make sure you stay in close contact with your Currency Index account manager to be kept informed of exactly what is happening and what the likely impact on your upcoming currency requirement will be.