Smart Currency Exchange: US non farm payroll data slightly disappointing [07/02/2011]

Smart Currency Exchange: US non farm payroll data slightly disappointing [07/02/2011]

EURO/GBP – 1.1880
US$/GBP – 1.6148
CHF/GBP – 1.5453
CAN$/GBP – 1.5950
AUS$/GBP – 1.5942
ZAR/GBP – 11.7081
JPY/GBP – 133.06
HKD/GBP – 12.5709
NZD/GBP – 2.1012
SEK/GBP – 10.4546
US$/EURO – 1.3588

On the back of better than expected UK economic data last week the markets began to talk about the UK increasing interest rates sooner than later. Mervyn King, Governor of the Bank of England, has made it clear that he wants to avoid raising interest rates as he thinks that it will affect the UK economic recovery negatively. However, inflation is on the up and hitting levels that make it uncomfortable for the Bank of England monetary policy committee who may be forced to increase interest rates. This is unlikely to happen at this weeks meeting but given two members of the committee voted for an increase last time it cannot be assume to be a certainty. Normally an increase in interest rates would be supportive for sterling but uncertainty reigns so I would also advise caution.

In the Euro zone we have important economic data released. German industrial orders for December are expected to show a slight dip when compared to November but the annual growth rate is expected to be a highly impressive 20%. Elsewhere the growth is less impressive [France is expected to have grown by 6.1%] but overall it is expected to be positive for the euro zone. The euro zone debt crisis will continue to be at the fore front of the markets thoughts this week.

US non farm payroll data released on Friday were slightly disappointing. This didn’t seem to affect the US$ unduly which had gained ground against the euro during the week. Economic data out of the US this week is limited and therefore events elsewhere such as in the Middle East are likely to influence the US$’s movement.

Elsewhere we have Japanese consumer confidence data released on Wednesday. An increase, the first in seven months, is expected.

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