Dollar falls broadly ahead of Friday's U.S. jobs data, sterling rally continues on optimism of a Conservative election win

Market Review - 05/12/2019  23:58GMT  

Dollar falls broadly ahead of Friday's U.S. jobs data, sterling rally continues on optimism of a Conservative election win

The greenback ended broadly lower against its G5 peers on Thursday due to retreat in U.S. Treasury yields and weakness in U.S. equities as well as intra-day gain in sterling on market optimism that Conservative Party will win next week's election with a majority.  
  
On the data front, Reuters reported the number of Americans filing applications for unemployment benefits unexpectedly fell last week, hitting their lowest level in seven months, suggesting the labor market remains solid even as the economy is slowing.   Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 203,000 for the week ended Nov. 30, the lowest level since mid-April, the Labor Department said on Thursday. Data for the prior week was unrevised.   Economists polled by Reuters had forecast claims increasing to 215,000 in the latest week.  
  
Versus the Japanese yen, although dollar initially fell from 108.93 in Asia to 108.78, price found renewed buying and rose to session highs at 108.99 in Europe on recovery in U.S. Treasury yields before falling to 108.66 in New York on usd's weakness.  
  
The single currency traded with a firm bias in Asia and gained to 1.1086 and despite retreating to 1.1080 in European morning, renewed buying emerged and price rose in tandem with sterling to 1.1108 in New York, price last traded at 1.1102 near the close.  
  
Reuters reported the euro zone economy grew at a modest pace in the third quarter with a negative impact from trade, while retail sales fell at their sharpest rate this year in October, data showed on Thursday.   Gross domestic product (GDP) in the 19 countries sharing the euro was up 0.2% in the July-September period, the same figure as the flash estimate released in October and unchanged from the second quarter.     
Retail sales in the euro zone in October fell by 0.6%, double the amount expected in a Reuters poll, and were up a modest 1.4% year-on-year. The monthly decline was the steepest fall of 2019.   
  
Although the British pound moved sideways in Asia and retreated from 1.3118 to 1.3106, price jumped at European open and then rose to 1.3148 as investors remained optimistic that UK Conservative Party can win with a majority in next week's election. The pair then ratcheted higher to a fresh near 7-month high of 1.3166 on sterling's broad-based strength.  
  
Data to be released on Friday :  
  
Australia AIG construction index, Japan all household spending, coincident index, leading indicator, Germany industrial output, France current account, trade balance, imports, exports, UK Halifax house prices, Italy retail sales, U.S. non-farm payrolls, private payrolls, unemployment rate, average earnings, University of Michigan sentiment index, wholesale inventories, wholesale sales, and Canada employment change, unemployment rate.