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16th February 2017 - Exchange Rates News written by TorFX for Exchange-Rate.net
The Pound was weakened against most major currencies on Wednesday, as the day's UK jobs data disappointed investors due to slowing wage growth.
In both bonus and non-bonus prints, UK wages slowed to 2.6% in the fourth quarter of 2016 - a two year low. While the other job stats such as the unemployment rate and number of new jobs was solid, investors expected wage growth to hold 2.8% with bonuses and 2.7% without.
Real pay (wage growth minus inflation) slipped to a two-year-low of 1.4%. Traders became concerned that UK citizens would become financially squeezed by rising consumer prices in the coming year, which would hit Britain's vital retail sector as inflation outpaced wages. Friday's UK retail sales results will indicate if consumer spending has slowed in January - and the Pound will drop again if so.
The Pound to US Dollar exchange rate fell to a new weekly low on Wednesday as Sterling trended weakly on wage stats while the US Dollar was sent flying thanks to a series of impressive US datasets.
January's US Consumer Price Index (CPI) figures came in at 2.5% year-on-year, beating projections of rising from 2.1% to 2.4%. The monthly print was expected to hold at 0.3% but instead jumped to 0.6%.
US retail sales also impressed in January, rising from 0.1% to 0.4% month on month. What's more, the December figure was raised from 0.6% to 1%. In the yearly print, the previous figure was revised from 4.1% to 4.4% and the new figure came in at an impressive 5.6%. This collection of results increased March Federal Reserve interest rate hike bets.
The Pound to Euro exchange rate slipped by around a quarter of a cent during Wednesday trade as investors became concerned about Britain's wage growth outlook.
However, concerns about rising populist politics in the Eurozone have weighed on the Euro this week and prevented it from capitalising on Sterling weakness. There are elections ahead in France, The Netherlands and Germany this year and many analysts fear that nationalists could take further power and begin to withdraw these key nations from the Eurozone.
This is perceived as one of the biggest threats to the Euro and could collapse the Eurozone. However, if by the end of the year it appears to be business as normal, the Euro will likely soar.
The Pound to Australian Dollar exchange rate slumped on Wednesday. The 'Aussie', bolstered by local confidence stats, was easily able to advance against a weakened Pound.
GBP/AUD bounced back from its lows on Thursday as investors digested a mixed Australian employment report. A bigger-than-expected change in employment of 13.5k impressed. However, full-time employment plunged by -44.8k and the unexpected improvement in the unemployment rate (to 5.7%) was caused by a drop in the participation rate - which fell from 64.7% to 64.6%.
The Pound to New Zealand Dollar exchange rate tumbled down on Wednesday, largely due to weakness in the Pound.
An increase in Federal Reserve interest rate hike bets has not weakened the 'Kiwi' significantly this week despite the risk-off movement that typically causes. A slip in New Zealand consumer confidence, according to Thursday's ANZ print, also failed to dent NZD significantly. On Thursday, GBP/NZD trended near its worst weekly levels.
The Pound to Canadian Dollar exchange rate initially slipped due to Pound weakness on Wednesday, but was able to recover some of its losses by the end of the day.
GBP/CAD still trended below the week's opening levels, but mixed news from the oil market this week has kept the 'Loonie' from capitalising.
Another bigger-than-expected US crude oil inventory report from the Energy Information Administration (EIA) showed that inventories had hit a record high of 518.1 million barrels this week, weighing on oil prices considerably.
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