Pound Dollar Exchange Rate Slips On Strong US Non-Farm Payrolls Data

Published: Monday, 5 November 2012 09:00 BST - Written by John Cameron

STORY LINK Pound Dollar Exchange Rate Slips On Strong US Non-Farm Payrolls Data

The key data release during last week’s session in the currency markets came during Friday afternoon’s European session, when the latest set of US employment figures were released. With the US Presidential Election taking place tomorrow, the way the jobs numbers were interpreted depended largely upon which side of the political divide you were sitting. Democrats chose to concentrate on the larger than anticipated 171,000 new jobs which were generated in the US last month and were keen to point out that the data revealed that more American workers now had jobs than when President Obama took office. Meanwhile, Republican supporters focused on the increase in the overall rate of unemployment in the States from September’s 7.8% to 7.9% last month, citing this as evidence that the American economy has not turned a corner during Obama’s four year tenure and that it was time for a change in the form of their man Mitt Romney.

Currency market participants primarily focussed on the 171,000 increase in the Non Farm Payrolls – after all, it’s called ‘NFP Friday’ and not ‘Rate of Unemployment Friday’. Most market speculators will have adjusted their positions one way or the other according to their expectations for the NFP figure, so when it thrashed expectations, the US Dollar enjoyed a sustained bout of support which sent the GBP USD exchange rate down to close to 1.6000 once again, having made a run at 1.6200 a short time earlier. Support for the Greenback following the release was informed by investors’ expectations of a decreased chance that the Fed will increase QE3 in the States due to the healthy levels of domestic job creation which the data revealed.

Elsewhere, Friday’s session also served as a reminder of the Canadian economy’s place in the grand scheme of things – Canadian Net Change in Employment data, released at the same time as the NFP data in the US, came out well below expectations of a 10,000 showing to print at 1,800. However, the Canadian Dollar still managed to make healthy gains against the Pound thanks to the better than expected US jobs figure. The GBP CAD exchange rate starts the week in the lower part of the 1.5900s following last week’s excursion into the 1.6000s.

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