The pound was buoyed yesterday following the better than expected job figures from the UK, driving the currency to a four month high against the US dollar.

The number of unemployed people in the UK fell by 8,600 in May, more than a forecasted fall of 5,000; however the unemployment rate remained at 7.8% for April. The data adds to the recent optimism over the recovery of the UK, following the better than expected manufacturing, construction and service sector figures from last week.

The pound was buoyed yesterday following the better than expected job figures from the UK, driving the currency to a four month high against the US dollar.

The number of unemployed people in the UK fell by 8,600 in May, more than a forecasted fall of 5,000; however the unemployment rate remained at 7.8% for April. The data adds to the recent optimism over the recovery of the UK, following the better than expected manufacturing, construction and service sector figures from last week.

Risks for the pound still remain the upcoming appointment of Mark Carney as the new Governor of Bank of England and especially his views on growth prospects for the UK and views relating to the expansion of the BoE current quantitative easing programme.

The euro rose against most of its counterparts yesterday as data revealed that industrial production in the euro zone rose by 0.4% in April against an expected fall of 0.2%. EURUSD currently stands at a four month high, whilst GBPEUR remains within its tight three month trading range.

Overnight the Reserve Bank of New Zealand held interest rates at 2.5% as expected. However what did surprise the markets was RBNZ Governor Graeme Wheeler’s willingness to intervene in the currency markets to curb their “overvalued” currency. The outlook remains for no increase in the interest rate until mid-2014.

The Australian dollar was supported last night as data revealed that the number or employed people increased by 1,100 in May, beating expectations of a decline of 10,000. The unemployment rate also improved to 5.5% in May from 5.6% in April.

The recent worries over emerging  markets, illustrated by the recent weakness in the Brazilian real, Thai baht and Indian rupee and poor data from China, was highlighted last night as The World Bank cut its global growth forecast for the year to 2.2%, less than the January forecast of 2.4%. As a result, risk appetite seems to have come out of the markets with Japan’s Nikkei falling 6.35% overnight and European stock markets down at an average of 1.7% so far this morning.

As a result the yen has increased in value against most of its counterparts as investors seek refuge in safe haven assets.

Looking forward to today, the US will come under focus as investors continue to keep a close on economic data to get a better gauge of what the Fed will do next regarding its QE programme.

Key Announcements:

13.30pm – USD – Initial Jobless Claims (Jun 7): Expected to fall to 345,000.

13.30pm – USD – Retail Sales (MoM) (May): Expected to increase to 0.4%.

15.00pm – USD – Business Inventories (Apr): Expected to improve to 0.3%.