Euro closes in on three year high ahead of US nonfarm payrolls report

( )

T
he Euro approached its strongest position against the US Dollar in three years on Thursday, extending its recent impressive rally to three percent since mid-December.

Currency investors continued to trade off the back of the same trend we have been seeing for a number of weeks – US Dollar weakness and common currency strength. The latter has been buoyed by a string of impressive economic data that has raised hopes the European Central Bank could end its QE programme this year. Thursday’s composite PMI was no exception, hitting its best level in 80 months as both manufacturing and services activity in the currency bloc continued to go from strength to strength.

Strong labour data in the US yesterday provided nothing but temporary respite for the greenback. The latest services PMI showed that activity in the sector picked up pace in the final month of last year. The index increased to 53.7 in December, comfortably above the 52.4 consensus. There was further encouraging news from the ADP employment change number, which represents jobs growth in the private sector. This unexpectedly jumped to 250,000 in December from the 190,000 consensus.

Labour market data in the US has improved in the past few months following the hurricane induced slowdown in September and all signs suggest we are on for another high number in this afternoon’s nonfarm payrolls release. The main nonfarm payrolls number, unemployment rate and earnings data will all be released at 13:30 UK time today.

UK services activity picks up pace in December

With a lack of any significant announcements or news on the Brexit front in the UK on Thursday, the Pound was little moved against its major peers.

The currency did edge modestly higher during London trading, mainly off the back of a survey which showed that the UK’s dominant services sector rebounded well in December. Last month’s services PMI increased to 54.2 versus the 54.0 consensus, despite what Markit cited as a downward drag from Brexit uncertainty. This somewhat alleviated concerns over a slowdown in overall activity in the UK in the final quarter of the year, after previous data earlier in the week showed a slowdown in both the construction in manufacturing sectors.

There will be no major economic data releases in the UK today and the Pound will mostly be driven by this afternoon’s US labour report.

Exit mobile version