So far this week, the pound has been pushed higher by moves in other currencies due to a lack of data releases from the UK economy or comments from Bank of England officials. On Thursday, the UK currency continued to edge upwards – driven by global risk appetite and dollar weakness following disappointing US jobs data – before jumping above the 1.38 resistance level.
The dollar was still feeling the weight of a much weaker than expected ADP National Employment Report on Thursday. Even encouraging Initial Jobless Claims numbers couldn’t stop the rot ahead of the much-anticipated Nonfarm Payrolls Report today. Applications for US state unemployment benefits dropped to a fresh pandemic low last week, hinting the labour market was continuing its recovery. Initial unemployment claims in regular state programmes dipped by 14,000 to 340,000 in the week ended 28 August, the Labor Department revealed Thursday.
New orders for US-made goods increased in July, while business spending on equipment remained robust, indicating manufacturing was withstanding persistent supply constraints and spending shifting back to services from goods. Commerce Department data on Thursday showed that factory orders rose 0.4% in July having advanced 1.5% in June.
Looking ahead
The US Nonfarm Payrolls report is scheduled for release today. The job numbers are being closely monitored by investors because the US Federal Reserve has signalled that the recovery in employment will determine the timing of tapering asset purchases. Economists expect the report from the US Bureau of Labor Statistics – which presents the number of new jobs created during the previous month in all non-agricultural business – to show 720,000 jobs and an unemployment rate falling to 5.2%.
Influential data comes thick and fast from the US today, with a raft of influential releases pencilled in the economic calendar: Average Hourly Earnings, Labour Force Participation Rate, Average Hourly Earnings, Markit Services Purchasing Managers’ Index (PMI), Markit PMI Composite, ISM Services New Orders Index, ISM Services PMI, ISM Services Employment Index, and ISM Services Prices Paid.
The Markit PMI for the UK services sector in August is slated for release today. This indicator of the economic situation in the UK services sector, which captures an overview of the condition of sales and employment, is expected to hold steady at 55.5 – a reading above 50 indicates expansion in the sector.
