Intraday Market Thoughts

GBP Strengthens On Labor Market Data

by Patrik Urban
Oct 17, 2012 12:43

UK jobless claims and unemployment rate fell; MPC minutes; Eurozone construction output rose; Swiss ZEW higher; EU summit. Focus turns to US real estate market data. Tuesday nights Premium Insights include 9 new trades and 4 trades in progress, alongside an emphasis on the confluence of support points across 5 segments of the Intermarket space. Cable longs hit all targets. We also have 5 new charts with a special technical focus on EURGBP.

USD is lower across the board in the ongoing session. European equities are gaining about 0.5% and the relative strength winner is AUD while USD is the weakest.

GBP pushed higher after the labor market data showed that UK jobless claims fell in September by 4K from previous decline by 14.2K and the ILO unemployment rate fell in August to 7.9% from previous 8.1% which is the lowest level in over a year. The improvement is somewhat surprising as it would have been reasonable to assume that jobless claims would rise when the temporary hiring for the Olympics ended.

The minutes from the latest MPC revealed unanimous voting to keep rates and the QE unchanged. The minutes from the next MPC meeting (November 8th) that are due on 11/21 are likely to be more interesting as some members have already expressed opposition to more QE. GBPUSD trades near session highs around 1.6160 and EURGBP trades around 0.8115.

Other data showed that Eurozone construction output rose 0.7% in August from previous 0.1% and Swiss ZEW economic expectations survey improved in October to -28.9 from -34.9. Focus will turn to the EU economic summit that begins tomorrow in Brussels. One of the main topics is likely to be the formation of the banking union. MNI has quoted a source who said that there will be no decision on the bank supervisor at the upcoming summit. EURUSD trades around 1.3120.

The US data calendar is limited to building permits that are expected to rise slightly to 0.81M in September from previous 0.80M and to housing starts that are seen higher at 0.77M from 0.75M. Both reports are due at 8:30 am ET.

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