US jobs disappoint, dollar falters

Jeremy Thomson-Cook
Jeremy Thomson-Cook 06 September 2021

GBP: Parliament return puts Boris in the limelight

EUR: Retail sales falter

USD: Poor jobs data weighs on the dollar

Sterling

The pound saw default moves based on weakness in the US dollar and euro following poor data results for both on Friday. Helping the pound to move higher, however today we see some of these gains erased as the UK parliament returns from its summer recess.

Prime Minister Boris Johnson is likely to discuss his intention to raise the national insurance tax, which is something he pledged he wouldn’t do in his 2019 manifesto but is being forced to consider given the fallout from Covid-19 and skyrocketing debt. The PM is likely to face some backlash for this, as well as the UK’s handling of Afghanistan, inflation, supply and labour shortages and of course the ongoing pandemic. This could see the pound held back ahead of the UK GDP release and Bank of England rate decision later this week.

Euro

Friday saw Eurozone July retail sales fall to -2.3% versus an expected slight positive gain. This was a blow for the euro, coming after enjoying some time in the sun following a strong inflation number which lead to murmurs of tapering stimulus and potential rate rises sooner than expected last week. These rumours will likely take a step back as the zone will need to inspect the conditions of economic recovery further before any potential rate hikes are to be expected. 

This week, we will await the rate decision from the European Central Bank (ECB) and GDP data, which will be further watched closely for any signs of a fall in growth in the economy.

USD

The eagerly awaited US employment figures were poor on Friday, with 500k fewer jobs than expected and as a result the dollar weakened across the board. However, the movement was limited with all eyes are now very firmly focussed on the next FED meeting, scheduled for 22 September. The major topics will be bond tapering, inflation, and the employment outlook for Q3 and beyond. One positive across the pond on Friday was the unemployment rate falling in line with expectation at 5.2%, dropping from 5.4%.

Today is a bank holiday in the US, as such we may see little movement in the rate.

Market rates

Today’s Interbank Rates at 09:55 against sterling. Movement vs Friday.

Euro €1.166 
US dollar $1.384 
Australian dollar $1.862 
South African rand R19.74 
Japanese yen ¥152.1 

Have a great day.