June 7, 2013 - Written by Minesh Chaudhari
STORY LINK GBP CAD & GBP USD Exchange Rates Tumble On North American Jobs Data
Market participants’ focus this afternoon was on this month’s edition of the US Non-Farm Payroll data, but in the end it was another North American data release which stole the show. This afternoon brought the publication of May’s Canadian Unemployment data. Market participants had relatively low expectations for the print, with the consensus being that the headline number would reveal that a mere 15,000 new positions had been generated in Canada’s commodity-driven economy last month. It therefore came as a significant shock to currency market participants when the Canadian labour market data came out at a stunning 95,000.
The reading sent the Canadian Dollar spiralling, causing the GBP CAD exchange rate plummeting from the post-1.6000 levels which it was inhabiting earlier today all the way down to as low as 1.5801 a little earlier on.
The US Non-Farm Payrolls figure also beat expectations, but only by a marginal amount. The showing of 175,000 versus analysts’ expectations of a print of 168,000 elicited some support for the US Dollar which has been out of favour amongst investors for a week or more. The buying pressure on the Greenback which followed this afternoon’s relatively strong NFP data was driven by market participants upwardly adjusting their bets on a near-term scaling back of the Federal Reserve’s Quantitative Easing programme. Federal Reserve policymaker Charles Plosser had stoked expectations of such an action last night when he suggested that a tapering of QE3 by the Fed’s policy committee could be decided upon as soon as this month’s policy meeting.
Elsewhere, the Pound has performed creditably so far today following some stronger than anticipated British trade data which revealed that April’s British trade gap came in at a narrower than anticipated £2.579bn. It doesn’t make great reading for investors holding Sterling-denominated assets, but looking at it from a ‘glass half full’ perspective, it could have been a whole lot worse.
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