According to the Office for National Statistics (ONS), the unemployment rate in the United Kingdom for three months to October was 4.2%, in line with market expectations. The figure dropped by 0.4% on a quarterly basis. In the three months to October, total pay increased by 4.9%, while regular pay grew by 4.3%. At the same time, job vacancies reached a record high of 1,219,000, up by 434,500 over the pre-pandemic level.
This morning’s data hasn’t done anything to boost the pound higher against the US dollar and looking at the sentiment indicator, retail traders may get squeezed harder as they are becoming more bullish. Today’s job data will start to decline soon if the government begins ramping up restrictions due to Omicron.
In a report released today by Japan's Ministry of Economy, Trade, and Industry (METI), the country's industrial production index rose by 1.8% month-on-month to 91.1 in October. Despite showing a 4.1% drop in production from October 2020, the result surprised analysts. Monthly, the shipments and inventories indexes grew by 2.4% and 0.6%, respectively, while the inventory rate contracted by 0.6%. It is good to see industrial production rising after 3 months of increasing declines. There is still a long way to go to get back to June 2021’s 6.5% increase and the positives are that since March 2020, 10 out of the previous 20 months have been positive. The yen is down today against its major peers as the markets remain risk-on at the start of the London session.
The forex heatmap has clearly shifted to money flowing into the commodity pairs and out of the safe have of the yen and Swiss franc. However, it is the euro that is lagging this morning and that is propelling the US dollar index out of the consolidation pattern.
I am not sure if the bullish momentum can last in the DXY but the fact that it has broken out of the first line of resistance is a positive for the greenback.
Later this morning there will be news from Europe regarding their Industrial Production and in the US session traders will be focused on the US PPI data. We may also get a decision on the Build Back Better Act as the White House has
indicated that they are looking for a resolution by Christmas and that there will be a vote on the Fed’s borrowing limit as soon as today.