Yesterday employment figures showed that overall employment fell 0.3% with a loss of 69,000 jobs. Jobless Claims fell 4.1k in December after falling 3.2k in November, the lowest level for 21 months. The claimant count (4.5%) and ILO unemployment rate ( 7.9%), remained unchanged.

The expectations for the labour market this year are poor with private sector job creation expected to come under pressure with the severe austerity measures set in place to reduce the UK budget deficit. Austerity measures always impact on growth meaning ultimately less trade for the everyday business and less jobs to keep these businesses going. Sterling responded to the news falling as expected.

In trade this morning it would appear that a rejection of the upper trend resistance level on the daily chart of GBP/USD signals that perhaps the pair is running out of steam. We would expect this market to retrace and test support at 1.59 again at some point today. Any beak below could see a bearish reversal and a move back towards 1.5675.

The Euro has benefited from the positive news on the bond auctions from last week for Spain and Portugal. These auctions and the insight as to what they mean, was discussed yesterday by ECB speakers and the comments made were taken well by the markets. The appetite for the Euro could however be short lived with sovereign debt risk still an ongoing concern.

Data released yesterday showed that the US housing market is still struggling despite recent positive news in other sectors. Housing starts dropped to an annual rate of 529,000 in December, ‘the lowest level since 2009’. News from the US today includes their weekly jobless claims figures, the Philly Fed index and existing home sales.

News from the UK this morning includes CBI industrial orders for January, this figure will be widely anticipated helping to provide insight into the pace of the UK’s manufacturing sector for the open of 2011.

If you have a currency requirement and would like to discuss the markets please don’t hesitate to contact me.

“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”

Best Regards
Luke Zorab