The Pound retreated against the US Dollar and the majority of other peers on Thursday as poor domestic wage growth data weighed upon sentiment and as the latest US jobless claims data came in better-than-forecast raising hopes that the USA’s job market recovery is gaining traction.
According to data released by the Washington based Labour Department the number of US citizens filing new claims for unemployment benefit dropped unexpectedly last week by 3,000.
The drop makes a seasonally adjusted figure of 302,000 for the week ending July 12. Economists had been expecting the number of claimants to rise to 310,000 last week.
Employment has grown by more than 200,000 jobs in each of the last five months, a stretch not seen since the late 1990’s.
The positive data will add to optimism that the Federal Reserve could choose to raise interest rates sooner than expected as it shows that the nation’s employment sector is continuing to improve, a key requisite for any rate increase.
The Pound to US Dollar exchange rate is trending around 1.7102 – 17/07/14
‘The broad array of indicators on the labour market has been showing some improvement. Layoffs already are at a low level, so now it’s more a question of whether the hiring pace that we saw in the first half of the year can be sustained,’ said an economist at HSBC Securities USA Inc.
News on Thursday soured some of the sentiment towards the claimant’s data as Microsoft announced that it will be cutting 18,000 jobs over the next year, the biggest cull in the computer giant’s history. Analysts had been expecting a cut of 6,000.
Also restraining further gains for the ‘Greenback’ was a separate report which showed that the USA’s housing market is continuing to struggle.
According to the Commerce Department, the number of new homes built in June fell unexpectedly to a nine-month low. New builds came in at an annualised rate of 893,000, a drop of 9.3% on the previous month. The biggest decline in construction was recorded in the south.
Perceived riskier assets and emerging market currencies struggled against the ‘Greenback’ on Thursday. Against the Russian Ruble the US Dollar advanced to a six-week high as demand for safe havens rose after the US imposed new, harsher sanctions upon Russia over the ongoing conflict in Ukraine.
UPDATED 10:25 GMT 18 July, 2014
Pound to US Dollar Claws Back Declines
The Pound to US Dollar (GBP/USD) exchange rate closed the European session in a slightly softer position on Thursday as profit taking, risk aversion and upbeat UK jobs data pushed the Pound lower against its US counterpart.
However, the pairing clawed back 0.1% on Friday as markets calmed following yesterday’s tragic news regarding the crash of a Malaysian passenger jet.
Gains could prove fleeting if today’s US University of Michigan Confidence Index shows the improvement expected.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.5847,
US Dollar,,Euro,0.7390 ,
US Dollar,,Canadian Dollar,1.0735 ,
US Dollar,,Australian Dollar,1.0660 ,
Pound Sterling,,US Dollar,1.7102 ,
Euro,,US Dollar,1.3533 ,
[/table]
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