Daily Market Report 11/03/2013

North America became a hot bed for investor appetite on Friday with both the US dollar and Canadian dollar printing new highs against the pound following better than expected job figures from both countries.

Data from the US showed 236,000 new jobs were added in February, easily surpassing the 160,000 new jobs that were initially forecasted. Unemployment in the US also edged lower to 7.7%, hitting a five year low. The improvement in the labour market is a sign that economic prospects are improving in the US when compared to other developed nations and could also give scope for the Federal Reserve to gradually taper off their current quantitative easing program.

GBP/USD traded to a 32 month low following the news, pushing the rate well below the all important psychological level of 1.50 which has provided support for the pound historically. With risks to the rate still on the downside, the next question is, how low can it go?

The unemployment rate in Canada remained at a four year low of 7%, falling in lower than the 7.1% forecasted by the market. The news served as respite for the Canadian dollar following a week where the Bank of Canada stated that they wouldn’t be raising interest rates anytime soon as inflation forecasts were revised lower. GBP/CAD fell to a 20 month low, hitting all important support levels that have propped up the pound on 2 previous occasions since July 2010.

The Office of National Statistics also revealed on Friday that UK building work fell by 6.3% in January. Whilst the sector only makes up 7% of GDP, it can still act as a drag on growth prospects and will no doubt add to the continued negative sentiment on the pound. The UK will come into focus on Tuesday when the National Institute of Economic and Social Research release their GDP estimate for February.

In the euro zone on Friday, credit rating agency Fitch downgraded Italy debt status to BBB+ with a negative outlook due to “increased political uncertainty and a non-conducive backdrop for further structural reform measures constitute a further adverse shock to the real economy”. Italy had further bad news this morning as fourth quarter GDP figures showed that the economy contracted more than anticipated to -2.8%.

With very little data due for release this morning, investor’s may look to sit on the sidelines today ahead of a busy day of economic data due for release in the UK tomorrow.

Key Announcements:

10.00am – EUR – Portugal’s Gross Domestic Product (YoY) (Q4): Previously at -3.5%.

10.00am – EUR – Greece’s Gross Domestic Product (YoY) (Q4): Previously at -6.9%.

23.50pm – JPY – BoJ Monetary Policy Meeting Minutes.