Daily Update: UK Labour Market Improves as the AUD Falls

UK Labour Market Improves as the AUD Falls Good morning,

GBP

Overnight, a swing in risk sentiment and a positive labour market report saw the pound improve. The claimant count dropped 92.6k whilst average earnings increased to 5.6% which is a positive sign for the recovering workforce. The only downside of the report was that only 113k jobs were created with the market expecting a figure closer to 150k which could've limited the pound's growth.

Looking ahead, attention turns to inflation figures which are due out this afternoon. Growth is expected for May's MoM figure for consumer inflation from 1.5% to 1.8% whilst producer inflation is forecast to decline slightly. Currently, the GBPSGD is trading at 1.868.

AUD

Yesterday, a decline in market sentiment saw the AUD depreciate against all currencies. Domestic data was limited with the highlight being the RBA meeting minutes which were released in the morning. The minutes provided the market with a muted response with the rhetoric surrounding the trading range of the AUD being narrow despite rising commodity prices. A benefit for the AUD was a trade agreement being reached with the UK which could keep future outlooks positive.

Today, economic data will likely be of low impact with mthe MI Leading Index for Australia. Currently, the AUDSGD is trading at 1.02.

USD

Data from the US was mixed overnight with the focus now on the Federal Reserve Monetary Police meeting this evening. Retail sales dropped more than expected in May and fell -1.3% as to an expected -0.8%, consumers have shifted spending from goods to services as more than half of eligible Americans are fully vaccinated. This has boosted demand for things such as travel, hotel accommodation and dining out. Core retail sales (excluding autos) was expected to rise by 0.2% but instead fell -0.7%. Despite the decline in May, the trend remains strong as April’s figure was revised up and is well above the pre-pandemic level. The NY Empire State Manufacturing index showed us manufacturing activity in the NY region grew at its weakest pace in 3 months. Industrial production and PPI readings both came in better than expected, both increasing by 0.8%.

The Federal Reserve meeting is this evening which will be followed by Jerome Powell’s press conference, building permits and housing starts will also be released. The USDSGD is currently trading at 1.327.

EUR

Overnight we saw the CPI figures for Germany and France come in as expected and several speeches by the ECB left the market unmoved.

Looking ahead later today we will be seeing Wages in Euro Zone for Q1 and a German 10-Year Bond Auction. With the overall impact of the data being limited this once again leaves the EUR open to changes in risk sentiment. EURSGD is currently trading at 1.609