The British Pound pares its decline on Wednesday as upbeat employment data eased concerns that the UK economy could be too fragile to endure the breakup with the European Union.
The UK National Statistics Administration reported on Wednesday that jobless rate contracted to 5% in May, surpassing the estimate of 5.1%, though the absolute change in employment came below the forecast at 55K versus 60K expected. Average weekly earnings for the last three months rose by 2%, beating expectations by 0.3%.
Positive labour changes in the UK helped the GBP recover earlier declines. GBP/USD posted an advance to 1.4215, later stepping back to the 1.4190 level. GBP/JPY retreated from three-year low of 149.17.
The confidence returned to the markets on the anticipations that the Fed Reserve will lean towards the dovish monetary policy, ensuring the US economy got enough time to shrug off from the gloomy labour data for May and shockwaves from the British referendum. The Fed Chair’s note on the significance of Brexit’s outcome for the world markets prove that global risks cause deep worries for the US policymakers. The rate hike is expected to happen in the second half of the year, with Janet Yellen calling for a more careful consideration of the next round of tightening.
The US Dollar index remain near the 95 level, declining by 0.21% to 94,83.
European equities advance along with emerging market currencies, with DAX and FTSE 100 gaining 1%, Euro Stoxx index adding 1.5%. The Japanese Yen, Gold and Swiss Franc trim down gains on growing risk appetite, USD/JPY gained 0.09% at 106.22, USD/CHF 0.0% at 0.9633, Gold lost 0.24% at 1,284.35.
The Russian Rouble pares declines after the Russian CBR cut interest rate to 10.5%, seeing that global risks have eased and commodity market has stabilized. EUR/USD gains 0.22%.
Chinese debt data showed the New Yuan Loans averaged 985.5B versus 750.0B estimated, increasing worries on debt-fuelled growth of the economy. ShComp rose by 1.58% on the news.
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