Eurozone data could add euro pressure
The euro had a mixed end to last week, continuing to lose ground to a strong dollar, while recovering a little against sterling. However, despite the marginal strength seen on Friday against sterling, the euro remains under a lot of pressure following the ECB rate cut on Thursday.
In terms of data, French industrial production figures came out much worse than expected, showing contraction rather than growth.
Strong employment data supports the dollar…
The dollar finished last week with a flourish, strengthening on the back of impressive labour data. The non-farm employment change figure surpassed market estimates – reaching 204,000, while last month’s figure was also upgraded. While the overall unemployment rate actually increased to 7.3%, this was in line with expectations and in turn speculation has increased that the Federal Reserve may taper of its QE program in next month’s central bank meeting.
Later this week we will hear testimony from Janet Yellen, who has been nominated to succeed Ben Bernanke when he steps down from his position as Federal Reserve Chairman in January. This testimony will include a question and answer session section where she must defend the central bank’s currently monetary policy and investors will look for hints as to when monetary policy may change.
…but US strength undermines Ausssie and NZ dollar
Elsewhere, the Canadian dollar strengthened on Friday on the back of positive labour data domestically which showed the overall unemployment rate had not increased despite market estimates. Furthermore, the better than expected labour data from the US helped the Canadian dollar as its strongest trading partner.
The same positive news from the US had a negative effect on the Australian and New Zealand dollars as confidence in the US dollar saw investors moving funds away from the antipodean currencies. This week the New Zealand dollar may see some change with the release of a financial stability report (on 12 November) and retail sales data (14 November).
Preliminary GDP figures from Japan also come out on 14 November with a small increase of 0.6% predicted.
