Euro Plunges To New Lows

Sterling has broken below 1.56 against the USD after a sharp move lower in Euro-Dollar yesterday afternoon. The move came after the ECB rejected the Spanish government’s plan to inject cash into the struggling lender Bankia, branding the plan ‘unacceptable’. The news quickly deflated the small rally taking place in the Euro and across European equity markets and the single currency remains on the back foot in early European trading this morning. This morning German unemployment data is released, with a small decrease of around 7K expected in May.

Keeping with the jobs market but moving over the Atlantic, US non Farm-payrolls are due on Friday, with consensus estimates suggesting 150K new jobs will be created this month. The Fed will continue to be concerned because at these sorts of levels of job creation it will take a significant amount of time to return the economy to any where near full employment. The problem seems to be that the US economy continues to grow just enough to make further QE unlikely at the moment. Mirroring the past few years, will it be at Jackson Hole that Mr. Bernanke announces another round of easing?

There is no Sterling data of note as we move towards the Queen’s jubilee weekend in the UK, but next week there is a lot to look forward to with the highlights the Bank of England rate decision and construction & services PMI.

Report by Alistair Cotton