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The Pound is little changed against the US Dollar and is holding steady against the Euro as economists await the release of data that is expected to show that construction in the UK expanded for a second consecutive month. Sterling was steady against ‘Cable’ throughout yesterday after the latest PMI data for the UK showed that manufacturing expanded in June, adding support to the belief that the nation’s recovery is on track.
The ‘Greenback’ strengthened to its highest-level in a month against the Japanese Yen as signs of improvement in the US economy increased speculation that the Federal Reserve will soon start scaling back its monetary easing policies. Against the Euro, ‘Cable’ hit a one-month high as investors preferred the safe haven currency and as economists expect the latest US data to show that the nation’s unemployment rate declined.
The Euro weakened against the US Dollar and Sterling after unemployment continued to rise in May. The number of people out of work in the Eurozone has surpassed 26.405 million and the number of people under the age of 25 out of work exceeded 5.5 million. Joblessness in the Euro zone has been rising almost without interruption since early 2008, when the financial crisis began, declining only briefly at the beginning of 2011. Analysts see little prospect for a sustained decline in the jobless rate anytime a view that weighed upon the single currency.
The ‘Aussie’ declined against the majority of its peers due to nation’s Central Bank deciding to leave interest rates at the record low level of 2.75%. Comments made by the Bank’s Governor Glenn Stevens also weighed upon the currency. Stevens said that that the ‘Aussie’ remains too high and that he would like to see it make further declines.
New Zealand Dollar
The ‘Kiwi’ made gains against the Australian Dollar after the Reserve Bank of Australia kept its interest rates on hold and said that further weakening of the ‘Aussie’ would rebalance the nation’s economy. Improved commodity prices also helped the currency.
The ‘Loonie’ was little moved yesterday as the Canadian markets were closed for a national holiday. However, the commodity driven currency dipped slightly against its British counterpart following the publication of stronger-than-expected UK manufacturing data. The next piece of key data for the Canadian currency will be released on Friday when the country’s latest jobs data is released.
South African Rand
The Rand had a muted reaction to the release of improved PMI data. The lack of positive movement was a result of mixed manufacturing data from elsewhere, namely Europe and China.