GBP: Johnson remains bullish on reopening
EUR: Should remain stable ahead of ECB meeting next week
USD: Dollar strength possible on improving jobs reports
Sterling rallied a tad yesterday following comments from Boris Johnson on reopening. After a weekend of ministers parroting a line that “there was no reason in the data” for the reopening on June 21st to be delayed, the PM echoed that statement yesterday.
Any delay would have an effect, albeit a marginal one, on sterling and any weakness would likely be counteracted by the knowledge that the UK vaccine effort continues at a decent pace. Data released yesterday showed that the take-up of the vaccine by those under 45 had been strong with as many as 25% more Brits getting the jab compared to their US counterparts.
With volatility very low at the moment it feels like those trading the single currency are already on a Mediterranean beach and away from their screens. Well-behaved equity markets are helping the overall risk environment and allowing EUR to stay strong against the USD.
A lot of movement hangs on the US jobs report tomorrow; anything apart from a heavily positive number should continue the recent run of euro outperformance ahead of an ECB meeting next week that will see growth upgrades for the Eurozone economy.
Last night’s Beige Book report from the Federal Reserve added little to our knowledge of the US economy; growth increasing but price pressures driving higher as supply chains continue to struggle. The key factor in all of this remains wages and employment on which we will receive two reports in the next 36hrs; ADP today and payrolls tomorrow.
While the former is not an indicator for the latter, a strong number at 13.15 BST today will hype up the USD before tomorrow’s official jobs report. As we have noted above, unless the numbers are incredibly strong we expect the trend of USD weakness to persist and offer both GBP and EUR the opportunity to break through their recent highs.
Commodity currencies remain in focus this morning following increases in oil prices, linked to the global recovery story. We would advise keeping an eye on the NOK given these developments and the recent strength of the Eurozone economy, which should combine to offer the Norwegian currency a catalyst for further strength.
Today’s interbank rates at 08.14 against sterling. Movement vs yesterday.
|US dollar||$1.414 ↓|
|Australian dollar||$1.832 ↑|
|South African rand||R19.18 ↓|
|Japanese yen||¥155.3 ↓|
Have a great day.