The pound stood firm in the face of a brief US dollar fightback in yesterday’s session. GBP/USD is up by more than 1% this week, with GBP/EUR up by half a per cent. The euro has also found traction against the US dollar, climbing by just under 1% to Friday.
American economic data was once again in the spotlight yesterday. It turned out to be something of a mixed bag, as building permits undershot expectations in April, while initial jobless claims came in above forecasts. Initial jobless claims still fell by 10k month-on-month to 222k, but that figure had been forecast to drop to 220k.
What should we make of that? It wasn’t immediately clear, yet markets couldn’t resist trying to read the tea leaves. Various datapoints pointed to inflation easing at a different pace, depending on which way you looked at them. It was no surprise then that currencies didn’t really know what to do with themselves and a brief US dollar rally ran out of steam almost as soon as the water had boiled.
The European Central Bank (ECB) warned that high levels of debt leave member nations at risk of ‘adverse shocks’. The ECB’s most recent financial stability review warned that high debt levels and lenient fiscal policies could raise borrowing costs and leave markets vulnerable to shocks.
Japanese GDP fell by more than expected in the first quarter of 2024. In the first estimate, growth fell by 0.5% as wage growth sputtered and the nation dealt with an earthquake in the Noto peninsula. The Japanese yen fell by around 1% against the US dollar following the release.
Australian unemployment increased to 4.1% in April from 3.9% the month prior. That’s the highest rate of joblessness since January and it ultimately fuelled a brief surge for the Australian dollar over its American rival.
European democracies sighed with relief yesterday as Slovak Prime Minister Robert Fico’s condition was upgraded to stable following Wednesday’s assassination attempt. Police have since charged a ‘lone wolf’ for the attempt on Fico’s life.
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