Yesterday was another strong day for the US dollar as employment figures surprised to the upside and the Federal Reserve extended lending facilities to the battered US financial sector.

ADP employment change, a private sector payrolls survey, was forecast to show that 58,000 jobs had been lost over the past 30 days however it instead showed that employers had in fact added 9,000 jobs; a strong indicator for tomorrow’s Non-Farms payroll release. The Fed extended lending facilities to investment banks until January 09 and although this will improve liquidity in the short term and grease the skids for a recovery the balance sheet and write-down problems that the likes of JP Morgan, Merrill Lynch and Morgan Stanley have suffered are still unaffected. The onwards march of dollar was pinned back however by a near $4 rise in the price of oil.

Sterling was able to continue higher against the euro as poor consumer confidence figures were released. The past 7 days have seen a lot of poor data from Eurozone constituents and although the trend remains upwards downside risks are still plenty; this morning’s HICP figure could shock the cross lower if inflation moves further from Trichet and the ECB’s target.

Dovish comments from the RBNZ Governor has seen the Kiwi dollar continue lower; a speech detailing the fact that there is ‘plenty of room’ for further interest rate cuts will always hurt a currency. 

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Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.