Currency update - 15 March 2012
Mar 14th 2012 | 9:16 pm
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Currency update - 15 March 2012
No great damage done by UK employment data
- Further QE recedes in the States
- Two Fed manufacturing surveys today
Good morning. Anyone who reckons their firm has too many chiefs and not enough Indians should have a look at the official rebuttal of a vituperative article by a departing bank vice president, which was widely published yesterday. Top brass were keen to point out that the departing veep is an exception; the other 11,999 are happy to hold the rank in the 30k-strong firm. But that means 40% of employees are vice presidents. Proportionally, that makes them roughly equivalent to deputy assistant managers' assistants at any other institution.
And investors did not even need to occupy that elevated status to spot the obvious flaw in Wednesday's UK employment data. The figures showed a monthly rise of 7.2k in the number of people claiming jobseeker's allowance, an increase on the previous month and well over the 5-6k that analysts had forecast. It put a dampener on the pound for the rest of the day, and against most currencies sterling is lower this morning than its level prior to the employment announcement.
Compared with yesterday's opening levels, however, the pound's performance is less embarrassing. It is no more than ten or twenty ticks lower against the US dollar and the euro. The pound is three quarters of a yen higher and has made gains against the Swiss franc, as well as all three Commonwealth commodity dollars.
The day's other data put Euroland inflation in line with forecasts at 2.7%, while industrial production there delivered a disappointing -1.2% monthly decline that dragged the annual increase down to a miserable 0.2%. Figures for Canadian capacity utilisation and US import prices were unexceptional. A seven-point advance for Business New Zealand's purchasing managers' index to 57.7 had minimal effect, as did an uptick in Australian inflation expectations to 2.7%.
Other than the UK employment numbers, the biggest impact on Wednesday came from Federal Reserve Chairman Ben Bernanke's comments. He made no attempt to discourage the view, formed by investors on Tuesday, that the possibility of a further round of asset purchases – quantitative easing – was receding. Investors saw that as good news for the US dollar and bad for the higher-yielding currencies, including the Australian dollar and the Brazilian real.
Today's event with the greatest potential for mischief was the Swiss National Bank's monetary policy decision. The announcement at 08:30 brought no change to the 0% benchmark interest rate, as expected, and the bank reiterated that it is "ready to buy unlimited amounts of foreign currencies" to maintain the SFr1.20 ceiling against the euro. The franc strengthened against most currencies as a result.
European employment numbers this morning and US weekly jobless claims after lunch ought to pass by quietly, as should US producer prices and international capital flows this afternoon. At half past twelve and two o'clock the New York and Philadelphia Federal Reserves publish the results of their manufacturing surveys. If both were to shift strongly in one direction the dollar would be likely to follow.
- Further QE recedes in the States
- Two Fed manufacturing surveys today
Good morning. Anyone who reckons their firm has too many chiefs and not enough Indians should have a look at the official rebuttal of a vituperative article by a departing bank vice president, which was widely published yesterday. Top brass were keen to point out that the departing veep is an exception; the other 11,999 are happy to hold the rank in the 30k-strong firm. But that means 40% of employees are vice presidents. Proportionally, that makes them roughly equivalent to deputy assistant managers' assistants at any other institution.
And investors did not even need to occupy that elevated status to spot the obvious flaw in Wednesday's UK employment data. The figures showed a monthly rise of 7.2k in the number of people claiming jobseeker's allowance, an increase on the previous month and well over the 5-6k that analysts had forecast. It put a dampener on the pound for the rest of the day, and against most currencies sterling is lower this morning than its level prior to the employment announcement.
Compared with yesterday's opening levels, however, the pound's performance is less embarrassing. It is no more than ten or twenty ticks lower against the US dollar and the euro. The pound is three quarters of a yen higher and has made gains against the Swiss franc, as well as all three Commonwealth commodity dollars.
The day's other data put Euroland inflation in line with forecasts at 2.7%, while industrial production there delivered a disappointing -1.2% monthly decline that dragged the annual increase down to a miserable 0.2%. Figures for Canadian capacity utilisation and US import prices were unexceptional. A seven-point advance for Business New Zealand's purchasing managers' index to 57.7 had minimal effect, as did an uptick in Australian inflation expectations to 2.7%.
Other than the UK employment numbers, the biggest impact on Wednesday came from Federal Reserve Chairman Ben Bernanke's comments. He made no attempt to discourage the view, formed by investors on Tuesday, that the possibility of a further round of asset purchases – quantitative easing – was receding. Investors saw that as good news for the US dollar and bad for the higher-yielding currencies, including the Australian dollar and the Brazilian real.
Today's event with the greatest potential for mischief was the Swiss National Bank's monetary policy decision. The announcement at 08:30 brought no change to the 0% benchmark interest rate, as expected, and the bank reiterated that it is "ready to buy unlimited amounts of foreign currencies" to maintain the SFr1.20 ceiling against the euro. The franc strengthened against most currencies as a result.
European employment numbers this morning and US weekly jobless claims after lunch ought to pass by quietly, as should US producer prices and international capital flows this afternoon. At half past twelve and two o'clock the New York and Philadelphia Federal Reserves publish the results of their manufacturing surveys. If both were to shift strongly in one direction the dollar would be likely to follow.
