Sterling strengthens late Friday, will it continue? | Smart Daily Currency Note

Sterling

Sterling had a strong end to the week on Friday, with construction data from July coming in considerably better than expected, hitting the highest level in over three years. These figures, coming off the back of strong manufacturing data on Thursday, meant that sterling logged some notable gains at tail end of the week. These gains were extended against the US dollar as worst-than-forecast employment figures out of the US pegged back the nation's currency. Considering the strong data out of the UK, sterling did not advance as much as it might have done and traded in a fairly narrow range as traders look ahead to this week's Bank of England inflation report. Wednesday will see the UK central bank Governor “respond to the Chancellor’s request for its assessment of the use of thresholds and forward guidance” during which he could indicate that interest rates will stay at record lows for a prolonged period. Sterling is likely to be under scrutiny and probably pressure for much of this week given the uncertainty surrounding what will be said. We also have services PMI data released today, inflation data on Tuesday and more manufacturing data on Wednesday. It promises to be an interesting week for sterling, so get in touch for the latest rates.

Euro

The euro struggled on Friday and only really made notable gains against a weak US dollar. Data released from Spain showed that the number of people without a job had fallen in July for the fifth month in a row, albeit by less than had initially been anticipated. Despite this drop, the International Monetary Fund suggested that unemployment in Spain would remain “above 25 per cent to 2018”. Services PMI figures released this morning for the Eurozone will be watched closely by investors who will hope for a positive reading following the better than expected manufacturing PMI figures released last week. It is a busy week for Germany with factory orders, industrial production and trade balance data all scheduled to be released. Other notable releases includes the preliminary Italian growth figures and the monthly bulletin from the European Central Bank. Call your trader now for the latest on the euro.

US dollar

Friday rounded off a volatile week for the US dollar, with another day of big movement. Early in the day the US dollar enjoyed slight gains following data released on Thursday showing a fall in jobless claims, before seeing these gains wiped out as it plummeted, losing ground quickly over the day against most of its major trading partners. This trend was set after the non-farm payrolls data came our much lower than expected, detailing growth of 162'000 in July versus forecasts of 185'000 - the lowest number since March. Moreover, last moths figures were also revised lower. As such, expectations that the Federal Reserve would start tapering by starting any time soon were lowered, as they have stated this would only be considered if significant improvements were seen in the labour market, and as such will want to see more sustainable growth in this area before implementing this. Important data due this week for the US dollar includes non-manufacturing PMI, the trade balance, and further unemployment data in the shape of the weekly unemployment claims figures, all of which could see a reaction from the US dollar rates. Call your trader today for the latest price on the Dollar.

Worldwide

Elsewhere, the Canadian dollar's slow week continued into Friday and it will remain in focus this week with a raft of data released including trade balance figures, unemployment statistics and PMI data. The South African rand fell through the psychological level of 10 to the dollar in early trade on Friday amid upbeat expectations for US jobs data. The worse-than-forecast results from the US sparked a response from the rand, and we saw a strong end to the week from the South African currency. The Australian dollar held three-year lows throughout Friday, as markets remained tentative ahead of Tuesday's interest rate decision and the increasing likelihood of a cut. Also out of Australia this week we have trade balance data, unemployment figures on Thursday and there is another statement from the RBA on monetary policy early Friday morning. It is an important week for Japan with current account figures, the monetary policy statement and the Bank of Japan press conference that follows. A big week for data, so get in touch for the latest rates.