Daily currency report
Overview
The UK was on the receiving end of some good news after it was announced that the number of unemployed people fell by 5k to 2.51m in April this year, combined with a sharp drop in those claiming unemployment benefits by 8.5k in May. The latter was much better than the predicted 5k decrease and caused a huge flurry into the pound at the start of session. Cable rose to levels not seen since February this year providing a great opportunity to hedge at levels that seemed highly optimistic. It is worth noting that EUR/USD has risen to levels seen only twice before this calendar year allowing the single currency to gain ground across the board. This theme is likely to continue until focus shifts to the US, where retail sales figures and weekly jobless claims are due for release.
Sterling
A good week for the pound got even better after the UK employment front showed signs of a recovering economy. An additional 5,000 people found jobs in April as well as the number of people claiming unemployment benefit falling by 8.5k in May, easily beating the forecast figure of 5k. The data may have come as a surprise to several economists who may now place the UK in a better light going forward, a feeling reflected across markets with investors favouring the pound over most majors.
US dollar
There could be bad news for the dollar with retail sales and weekly jobless claims due for release. Forecasters have priced in a pick-up in high street sales in May from 0.1 per cent to 0.4 per cent with any release under this figure likely to cause more damage to the greenback. Weekly jobless claims are expected to show a small drop to 345k.
Euro
The single currency took advantage of a significant sell-off in the greenback to make up strong ground against its US rival. Fortunately for European investors, disappointing eurozone industrial production figures were generally overlooked after coming in well below forecasts and showing negative growth of -0.6 per cent in April. There is little of interest in terms of European data which may allow the euro to take further advantage of further selling of the US dollar if data from the US disappoints.