GBP

Yesterday
in the Autumn Forecast Statement we saw the UK Chancellor of the Exchequer,
George Osborne, raise the UK’s economic growth forecast for 2013 to 1.4% from
the 0.6% predicted in March’s Budget.

Also
the Bank of England held the interest rate at 0.5% as well as leaving its
monthly asset purchasing program at £375bn.

GBP

Yesterday
in the Autumn Forecast Statement we saw the UK Chancellor of the Exchequer,
George Osborne, raise the UK’s economic growth forecast for 2013 to 1.4% from
the 0.6% predicted in March’s Budget.

Also
the Bank of England held the interest rate at 0.5% as well as leaving its
monthly asset purchasing program at £375bn.

Both
events were hardly surprising and in the absence of anything that would
indicate a rate hike occurring sooner, we saw investors book profits on the
pounds recent run and as a result the currency was sold against 16 of its major
peers.

With
the underlying theme dictating the pounds movements being the likelihood of a
rate hike, markets will now focus on next weeks BoE minutes to have a sense of
when this may occur.

EUR

The
euro continued its strength that we have seen all week, after Mario Draghi and
the European Central Bank refrained from introducing further monetary stimulus.

In
recent weeks, we have seen the euro weaken following murmurs of negative
interest rates being introduced by the ECB. However, despite commenting that
they expect inflation to remain low for a prolonged period and thus also the
interest rate remaining at 0.25%; euro buyer’s came back into the market as the
ECB gave no indication that negative interest rate will be introduced.

The
ECB also decided to keep the benchmark interest rate at 0.25%.

USD

With
the underlying theme behind US dollar movements, being the likelihood of how
soon tapering of quantitative easing (QE) may occur, data released yesterday saw
investors increase bets that this may occur sooner than the March forecast.

Firstly,
yesterday’s data revealed that the US economy grew at its fastest pace since
the first quarter of 2010 to 3.6% up from 2.6% – eradicating previous thoughts
that the 17 day Government shutdown in October would have a detrimental impact
on these figures.

Key
to the tapering of the QE is an improvement in US job market. Adding to the
impressive ADP figures on Wednesday, yesterday we saw the number of people
filing for jobless claims fall unexpectedly by 23,000 indicating an improvement
in employment.

The
US dollar strengthened against most of its peers on the back of these two
encouraging bits of data.

Today

The
US job market and the likelihood of tapering QE in the US will be in the
spotlight today with the release of the infamous non-farm payroll figures and
the rate of unemployment.

Expectations
are for 180,000 new jobs being added in November, slightly less than the
204,000 jobs added in October However, given the recent ADP figures surpassing
expectations we could well see impressive figures also today, causing US dollar
buyers to flood into the market to support the US dollar.

Another
reason for potential further US dollar strength could be caused by the unemployment
rate falling to 7.2% from 7.3%.

Key Announcements:

11.00am
– EUR – German Factory Orders (Oct): Expected to fall by 0.6%.

13.30pm
– USD – Nonfarm Payrolls (Nov): Expected to show 180,000 new jobs were added.

13.30pm
– USD – Unemployment Rate (Nov): Expected to fall to 7.2%.

13.30pm
– USD – Personal Income (Oct): Expected to show a 0.3% rise.

13.30pm
– USD – Personal Spending (Oct): Expected to increase to 0.4%. 

13.30pm
– CAD – Unemployment Rate (Nov): Expected to remain at 6.9%.

14.55pm
– USD – Reuters Consumer Sentiment Index (Dec): Expected to rise to 76.