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The US dollar recorded gains against the pound and the euro.
GBP/EUR continued to trade in and around multi-month highs yesterday, although both currencies had a tougher time of it against the US dollar.
Sterling ended Tuesday around 0.25% down on the US dollar, while EUR/USD sank by around 0.5%. Markets seem to be making a slight adjustment following the pound’s strong week last time out, with Sunday paper fears of a wider Middle East conflict spilling into this week’s trading.
The highlight of the UK’s data yesterday was the final read for the S&P Global/CIPS Services PMI, which surprised to the upside. The services gauge was raised from a preliminary 50.5 to 50.9 for November, nudging up into positive territory (i.e. above 50) from October’s 49.5.
Just when the data threatened to peter out, what better to keep us on our toes than the JOLTs job openings data from the US? There may be a few red faces among economists today, as consensus forecasts overshot the actual read – 8.733mn – by a whopping 650k. Job openings fell across all regions of America in October, indicating a rapidly cooling labour market.
That information was set against another important piece of the puzzle. The US ISM Services PMI increased to 52.7% in November from 51.8% the month before, as new orders remained strong and inventories rebounded.
Bank of England (BoE) governor Andrew Bailey will deliver prepared remarks today. His words will be closely watched, particularly as markets are keen to suss out which central bank will be first to cut rates (spoiler alert: the BoE is very much the outsider in this race, although it’s impossible to be certain with currency markets).
Ratings agency Moody’s has cut its credit outlook for Chinese sovereign bonds to negative, citing the high cost of government support for the housing sector. The Chinese government has ramped up borrowing to prop up indebted developers, which Moody’s said may cause it to reconsider its Single A rating on the country.
The EU has proposed delaying the introduction of tariffs on electric vehicle sales between the UK and EU by three years, in line with a request from Downing Street. The ten percent duty had been set to set to take effect on January 1 and had drawn criticism from car manufacturers.
Europe’s largest tour operator, Tui, is considering delisting from the London Stock Exchange. The company said it was weighing its options, given a considerable part of its investor base had migrated from the UK to Germany.
Elon Musk is seeking to raise $1bn for an AI startup, amid similar moves from fellow Silicon Valley heavyweights.
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GBP: Bailey benchmark
GBP/EUR continued to bob along near its highest level in months, although the pound lost some value to the US dollar.
The pound has not exactly benefitted from a quiet schedule of macro data this week. Next week brings much more impactful events, but Andrew Bailey’s remarks today will at least give markets a benchmark to go off of.
GBP/USD: the past year
EUR: Pre-Christmas spree?
EUR/GBP treaded water (albeit at high levels) yesterday, while the euro slid by around 0.5% against a resurgent US dollar.
We’ll have to wait until the tail end of this week to get any more seriously juicy eurozone data. This morning will at least give us an insight into October’s retail sales, which markets predict to have nudged up slightly as consumers load up on stocking fillers and Christmas spreads.
USD: JOLTed awake
The US dollar continued to benefit from its perception as a safe-haven, posting gains against the pound and the euro in yesterday’s session.
While markets rarely get everything (or even very much) right, it’s not often consensus estimates miss the mark as much as they did for the US JOLTs job openings read yesterday. Forecasts overshot the actual figure by around 650k, as the US labour market slowed by a much faster rate than anticipated.
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