The Pound spent much of the day holding steady against the US Dollar in spite of a decline in the UK’s construction PMI.
However, the GBP to USD exchange rate declined after the ‘Greenback’ broadly strengthened in response to shockingly strong US employment figures.
Economists were hoping for an impressive number, but the actual result topped even the most optimistic of estimates.
In April the US economy added a whopping 288,000 positions – the largest monthly jobs gain since the beginning of 2012 and significantly more than the 218,000 increase expected.
March’s employment gain was positively revised to 203,000.
Manufacturing payrolls increased by 12,000 rather than 8,000 while private payrolls surged by 273,000.
The US unemployment rate plunged from 6.7 per cent to 6.3 per cent. The jobless rate had been forecast to ease to 6.6 per cent.
The data also showed that the underemployment rate eased from 12.7 per cent to 12.3 per cent last month.
However, it wasn’t all good news as the participation rate moved from 63.2 per cent to 62.8 per cent, an over thirty year low.
Average hourly earnings also stagnated in April, month-on-month, rather than gaining the 0.2 per cent expected.
On the year average hourly earnings were up 1.9 per cent.
One senior US economist said this of the data; ‘The economy is gathering momentum after the bad winter. The unemployment rate will stay in its downward trend, which means tapering will continue.’
As the state of the labour market is one of the main drivers of Federal Reserve policy, this report might see the central bank adopt a less dovish stance at its next meeting.
The US Dollar posted gains against the majority of its most traded currency counterparts after the report was published and the Pound slid lower against its North American counterpart.
Next week is crammed with data releases and currency market volatility can be expected.
The US reports to focus on include services/composite PMI, trade balance figures, the initial jobless claims report and domestic JOLTs job openings figures.
Pound to US Dollar movement is also likely to follow the Bank of England’s rate decision, taking place on May 8th.
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,0.5929,
US Dollar,,Canadian Dollar,1.0983,
US Dollar,,Euro,0.7237,
US Dollar,,Australian Dollar,1.0855,
US Dollar,,New Zealand Dollar,1.1601 ,
Canadian Dollar,,US Dollar ,0.9126,
Pound Sterling,,US Dollar,1.6840,
Euro,,US Dollar,1.3817,
Australian Dollar,,US Dollar,0.9216,
New Zealand Dollar,,US Dollar,0.8595 ,
[/table]
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