Rational FX: US sees an impressive 240,000 rise in employment numbers [06/01/2011]

• In Europe yesterday we had the industrial new orders (mom) figure which came in slightly worse than expected but much better than previously. This kept up the momentum for the Euro strength against the US Dollar yesterday morning.
• Also in Europe we had the Producer Price Index, an inflationary figure and came out better than expected, with interest rates so low it will give the ECB something to think about when they look at interest rates later this month.
• In the US we had the ADP employment figure which came out much better than expected since statistics began in 2001. This has momentarily cemented the fact that a second round of QE in the US may not be needed now and we saw the US Dollar strengthen against its counterparts and sterling/dollar traded as low as 1.5452 from a high of 1.5625 earlier in the day.
• Lastly in the US we had the ISM Non Manufacturing figure which showed positive business conditions in the US as this figure was the highest reading in four years, and no doubt helped to continue strength in the US Dollar.

Today’s’ Market Movers

• UK Purchasing managers Index Services has already come out this morning. It was expected to come out at 53, however it came out at 47. This figure is negative and we have seen sterling come off against most major counterparts since.
• EU Consumer Confidence came out worse than expected this morning, which has seen no real movement for the euro zone as this has come at the same time as Economic and Industrial confidence which actually came out positive.
• EU Retail Sales is expected to come in higher than last month’s revised 0.1% however it came out -0.8% MoM and 0.1% YoY. This goes to show that there is still serious concerns in the euro zone.
• German Factory Orders are expected to come out slightly less than previous at 1%, however this is still positive as it shows an upward trend coming through the euro zones biggest economy.
• US weekly jobless claims are expected to tick up slightly from last month’s 29 month low this goes hand in hand with the spectacular ADP jobs data which was released yesterday and showed a massive increase of 240k which is the highest rise since records began.