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20.07.2016 12:25

European session review: the pound was up on strong labor market data

The following data was published:

(Time / country / index / period / previous value / forecast)

6:00 Germany Producer Price Index m / m in June 0.4% 0.2% 0.4%

6:00 Germany Producer Price Index y / y in June -2.7% -2.4% -2.2%

8:00 Eurozone balance of payments, without taking into account seasonal adjustments, 36.1 billion in May Revision 34 15.4

8:30 UK Change of average earnings, 3 m / d in May 2.0% 2.3% 2.3%

8:30 Changing UK average earnings (excluding bonuses), m 3 / y in May 2.3% 2.3% 2.2%

8:30 UK Number of applications for unemployment benefits, thousand. 12.2 Revised June from -0.4 3.5 0.4

8:30 UK ILO unemployment rate for May 5% 5% 4.9%

9:00 Switzerland investor expectations index according to ZEW and Credit Suisse in July 19.4 5.9

The British Pound was up against the US dollar and the euro after UK data showed a less than expected increase in the number of applications for unemployment benefits in the UK in June.

However, the market reaction may be limited, as investors' attention is focused on the preliminary PMI data, which will be released on Friday and should give the first indication of the economic activity after the referendum on EU membership.

The unemployment rate in the UK fell to its lowest level in more than 10 years in May, the Office for National Statistics said on Wednesday.

The unemployment rate fell to 4.9 percent in the three months to May from 5.6 percent a year earlier.

The last time the index was lower was in the period from July to September 2005.

There were 1.65 million unemployed, which is 54,000 less than 3 months until February 2016, the ONS said.

At the same time, the employment rate amounted to 74.4 percent, the highest since comparable records began in 1971.

Average weekly earnings, including bonuses, increased by 2.3 percent, and earnings excluding bonuses rose by 2.2 percent compared with a year earlier.

The level of claims for unemployment benefits remained steady at 2.2 percent in June, in line with expectations. The number of people claiming unemployment benefits rose slightly to 400 in May, while the expected increase was 3500.

The US dollar traded near four-month highs against other major currencies as global growth problems continue to put pressure on the market sentiment.

Investors remain cautious after the International Monetary Fund has revised downward the forecast for global economic growth for 2016 to 3.1% from 3.2%, although it expects a rebound to 3.4% in 2017.

The Fund has also lowered the UK growth forecast this year to 1.7% from 1.9% and reduced its growth in 2017 to 1.3% compared to the April estimate of 2.2%, citing Brexit.

The euro rebounded against the dollar, helped by positive data on the index of producer prices in Germany, which in June were higher than analysts' expectations. The Producer Price Index, published by the Statistical Office of Germany rose by 0.4% in June, which coincided with the previous value, and was higher than the forecast of 0.2%. The annualized rate was -2.2%, after declining by -2.7% in the previous month.

Investors were also cautious on the eve of the main event of the week - the meeting of the European Central Bank. Many economists believe that the ECB will refrain from further easing of monetary policy, despite the strengthening of the risks to the economic situation after Brexit, and will continue to focus on the implementation of the previously announced measures. However, the policy may indicate the possibility of QE program changes, which may include the extension of the terms of this program, and / or enlargement of the list of assets that are available for purchase. According to the result of the latest Reuters poll, 18 of 19 traders predict that during the July meeting of the ECB will not change the parameters of monetary policy.

EUR / USD: during the European session, the pair fell to $ 1.0978, and then rose to $ 1.1021

GBP / USD: during the European session, the pair rose to $ 1.3196

USD / JPY: during the European session, the pair rose to Y106.71

20.07.2016 11:51


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