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US unemployment falls back to pre-pandemic level

Monday 6 December, 2021

Daily Currency Update

With little domestic economic data of note released on Friday it was Coronavirus developments which dominated the news on Friday and over the weekend. The new Omicron variant is now spreading among the community within the UK with some expecting it to become the dominant variant within weeks. We are still some time away from knowing the full effects of Omicron however initial research shows that although more transmissible its effects could be weaker than the dominant Delta strain seen here in the UK. They key factor yet to be established is whether the current suite of vaccines available offer good protection against Omicron or whether they will have to be tweaked by the pharmaceutical companies that produce them which could take a few months. In an effort to slowdown its spread the government has reintroduced the requirement for international travellers to get tested before returning to the UK. Looking ahead its a relatively quiet week for the UK with todays main event being a speech by Bank of England Deputy Ben Broadbent which could give more clues as to whether we may see the BoE hike rates at its Dec 16th meeting. GBP/USD currently sits at 1.3260 with GBP/EUR 1.1740.

Key Movers

Fridays big event was the monthly US Jobs Report from the States with a mixed bag of numbers produced. The headline Non-Farm Payrolls data fell way short of most estimations printing 210k v the median estimate of 553k jobs being added for November. Usually this would have led to a sell off in the dollar however accompanying the NFP number was an eye-catching drop in the level of unemployment. This fell further than expected from 4.6% to 4.2% which means it is now back to pre-pandemic levels. The dollar gained in immediate aftermath of the release however with the Federal Reserve now looking to accelerate the tapering of its asset purchase programme and possibly up to three rate hikes due in 2022 it seems the markets werent particularly interested in this months release so the moves were relatively muted. Looking ahead tomorrows German ZEW Economic Sentiment survey will be the key release from the eurozone. We could also see Germany’s new coalition government finally formed. The main event from the US will be Fridays CPI numbers. EUR/USD trades at 1.1290.

Expected Ranges

  • GBP/USD: 1.3190 – 1.3350 ▼
  • GBP/EUR: 1.1685 – 1.1800 ▲
  • EUR/USD: 1.1260 – 1.1355 ▼