US Employment Figures Sky High Boosting Dollar

This week is shaping up to be very strong for the Dollar which has now climbed higher in response to an outstanding set of jobs figures yesterday. ADP US Payroll figures showed an increase in private sector employment which was nearly three times the forecast at 297,000 for December. Although some have pointed out that this could be due to seasonal variation, sentiment towards the outcome on Friday for further ‘non farm pay-roll data’ is now elevated. If this figure also comes in well above forecasts, the Dollar may well end the week on a high.

Pound Sterling – UK Markets

Sterling has moved lower against the Dollar as yesterday’s disappointing construction figures made their mark in stark contrast to the glowing job figures from the US. They reflected the first fall in construction activity in nine months thought to be attributed to the severe weather conditions. Against the Euro, the Pound performed well, with fears over European debt refusing to go away. Today’s PMI Services data has also come in lower than last month and lower than expected. The services data does not typically tend to have as much effect as the manufacturing and construction data which has already been released this week, although as this is adding another disappointing figure to the construction output, there may be some influence.

US Dollar – US Markets

US jobs figures were surprisingly high sending the Dollar upwards yesterday. A record 297,000 increase in the amount of employees taken on in the private sector in December has suggested that the US economy is set to grow in the start of 2011. Additionally, outplacement firm Challenger Gray and Christmas reported that the amount of job cuts announced by US companies in 2010 was down by 59 percent compared to the previous year and the lowest figure for any year since 1997. Expectations are now raised for tomorrow’s key non-farm payroll figures which could help finish the week with the Dollar on a high if they don’t disappoint. The general sentiment towards the US economy is certainly starting the year brightly.

Euro – European Markets

The Euro has been pushed lower with some positive data from Germany failing to lift the currency. The Swiss National bank also announced that they would no longer accept Irish debt as collateral bringing Ireland’s issues back to the limelight. This morning has seen a wealth of economic data releases from Europe. Consumer, economic and industrial confidence fell in December and retail sales also dropped. There is nothing obvious to hope for to suggest that the Euro might gain some momentum particularly in relation to the Dollar.

Other Currencies – Highlights

The Australian floods are being blamed for bringing the Australian Dollar down to a two week low as concerns mount about the likely impact of the floods on the economy. The Australian Financial Review has reported that the floods may cost more the 5 billion Australian Dollars. The Canadian Dollar has fared well in response to the positive US jobs figures. As one of the main trading partners of the US, the growing strength in the US economy is likely to simultaneously lift the Canadian currency. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.