As expected, sterling saw the most excitement in major currency crosses after economic data showed the rate of unemployment falling to 7.7 per cent. The unexpected decline in the rate of unemployment coupled with the large declines in the claimant count supported the view that the BoE’s 7 per cent target level for unemployment could be reached sooner than the bank’s guidance period. Sterling jumped to seven-month highs against the US dollar and euro This unusual trading pattern was due to weak employment figures released in Australia, while the RBNZ decided to leave interest rates unchanged, but maintained a hawkish tone on its interest rate outlook. In the eurozone, industrial output will be released, but given the downside surprises seen in the German and French output figures recently, the prospects of a strong figure are limited. That could help weigh down the euro. Later in the session weekly jobless claims in the US will be released. The jobless claims figures have foretold an improving jobs sector, which has yet to be reflected in non-farm payrolls data.

Sterling

Sterling moved to seven-month highs against the US dollar and euro in a session after the release of claimant count data and unemployment figures. The drop in the claimant count was much more than forecast and downward revisions made to the prior month’s data only complimented the release. The rate of unemployment ticked lower to 7.7 per cent, which was also unexpected. The drop seen in the jobless rate was the lowest seen since late 2012.

US dollar

The 12-year anniversary of 9/11 was commemorated without interruption. Weekly jobless claims data is the only figure scheduled for release worth noting, while retail sales will be on the agenda. The weekly jobless claims figure continues to forecast improvement in the non-farm payrolls data, but that has failed to materialize.

Euro

The euro moved to seven-month lows against sterling, while reaching one week highs against the US dollar, but failed to maintain five-month highs against the Japanese yen. On the positive side, Moody’s said that improved growth outlook for the eurozone would mean fewer corporate downgrades. The only data on agenda is industrial output. German output disappointed recently falling 1.7 per cent in July, while French output also failed to meet expectations when it fell 0.6 per cent. The data will not bode well for eurozone release.

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