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The pound spurted higher during today’s morning London session, thanks to an upbeat jobs report. Meanwhile, the downbeat mood from the earlier Asian session got carried over into the European session and took its toll on the higher-yielding Aussie and Kiwi.

As for the other currencies, the Swissy and the yen were well-supported, likely because of the risk-off vibes. The Loonie, meanwhile, was mostly weaker, while the Greenback was mixed and the euro was mostly higher.

  • Italian trade balance: €5.42B vs. €1.97B expected, €1.88B previous
  • U.K. jobless rate: 4.6% vs. steady at 4.7% expected
  • Claimant count change in the U.K.: 19.4K vs. 33.5K previous
  • U.K. average earning index (no bonus): 2.1% vs. 2.2% expected, 2.2% as previous
  • U.K. average earning index (w/ bonus): 2.4% vs. 2.4% expected, 2.3% previous
  • Euro Zone final HICP y/y: unchanged at 1.9% as expected
  • Euro Zone final core HICP y/y: unchanged at 1.2% as expected

Major Events/Reports

Awesome U.K. jobs report, but real wages took another hit

The Office for National Statistics (ONS) released the U.K.’s latest jobs report earlier. And looking at the report, it looks like U.K.’s jobless rate ticked lower from 4.7% to 4.6% in the three months to March.

This is great because the reading is the lowest since 1975. Wowsers! Even better, the dip in the jobless rate appears to be healthy because the employment rate actually improved from 74.6% to 74.8%, which is a new all-time high.

On a slightly more downbeat note, the number of people claiming unemployment benefits increased by 19.5K in April. And just as bad, the reading for March was bumped higher from 25.5k to 33.5K, so more people claimed unemployment benefits that originally estimated.

Moving on to wages, nominal average weekly earnings (bonuses included) grew by 2.4% year-on-year in March, with a three-month average of 2.4%. This is slower than the previous reading of 2.9%.

However, the three-month average is a tick higher than the previous three-month average of 2.3%. In addition, the three-month average meets expectations.

On another upbeat note, the slower headline reading for nominal wages was due to smaller increase in bonuses (3.9% vs. 12.4% previous).

If bonuses are stripped, then average weekly earnings only grew by 2.1%, which is faster than the previous 1.9% increase. However, the three-month average did tick lower from 2.2% to 2.1%, instead of consensus that it would match the previous +2.2% increase. Still, a positive development overall.

In real terms (inflation is taken into account), real average weekly earnings (including bonuses) fell by 0.1%, which is the first negative reading since August 2014.

Moreover, if bonuses are excluded, then real average weekly earnings fell by 0.5% year-on-year. This is the second negative reading in a row.

Risk aversion persists in Europe

The gloomy mood from the earlier Asian session apparently spilled over into the European session since European equity indices were bleeding out.

  • The pan-European FTSEurofirst 300 was down by 0.35% to 1,552.64
  • Germany’s DAX was down by 0.30% to 12,765.50
  • The blue-chip Euro Stoxx 50 was down by 0.38% to 3,627.50

U.S. equity futures also felt the pain.

  • S&P 500 futures were down by 0.42% to 2,387.00
  • Nasdaq futures were down by 0.36% to 5,703.38

Market analysts are still blaming the persistent risk-off vibes on political happenings in the United States, although negative reports for specific European companies also soured overall risk sentiment.

Major Market Mover(s):

GBP

The pound was the best-performing currency of today’s morning London session, thanks to the upbeat jobs report.

Interestingly enough, the pound actually began surging higher before the jobs report was even released. Must be another one of those weird movements that usually happens before top-tier U.K. reports are released, as noted in a Reuters report which cited its own study and a study by the Wall Street Journal. And there’s speculation that the pound’s moves are linked to leaks.

Another interesting point is that wage growth took another hit, but that didn’t seem to faze pound bulls, likely because the BOE has been warning about it.

GBP/USD was up by 48 pips (+0.37%) to 1.2963, GBP/AUD was up by 96 pips (+0.56%) to 1.7499, GBP/NZD was up by 114 pips (+0.61%) to 1.8808

AUD & NZD

The higher-yielding Aussie and Kiwi were the wort-performing currencies of the session, even though there were no apparent catalysts and even though commodities recovered during the session. Risk aversion persisted, though, and that likely weighed down on the two higher-yielding comdolls.

NZD/USD was down by 18 pips (-0.27%) to 0.6890, NZD/CHF was down by 16 pips (-0.23%) to 0.6776, NZD/JPY was down by 22 pips (-0.29%) to 77.41

AUD/USD was down by 15 pips (-0.20%) to 0.7406, AUD/JPY was down by 19 pips (-0.24%) to 83.20, AUD/CHF was down by 12 pips (-0.15%) to 0.7283

Watch Out For:

  • 12:30 pm GMT: Canadian manufacturing sales (1.1% expected, -0.2% previous)
  • 2:30 pm GMT: U.S. crude oil inventories