The Euro’s Power Surge: A Brief, Bite‑Sized Market Update
Picture the euro as a superhero that’s just finished a marathon. At 10:25 GMT, it leapt to $1.07305 against the greenbacks—its best jump since Monday of last week. While it’s hustling to curb the slump it’s been grappling with against the British pound, today it nudged its way to £0.87262, a peak not seen since the start of this week’s trading. Against the Japanese yen, it struck a new high of ¥162.758—a record we haven’t seen since 2008.
Why the Euro’s Been Feeling Good
Data are everywhere telling the euro that the zone’s economy is getting a confidence boost:
- German ZEW Economic Sentiment Index – 9.8 points, the first positive reading since April. Expectation was 5, and the previous reading was a gloomy -1.1.
- Euro‑zone ZEW Sentiment Index – 13.8 points for November, the highest since last February. For the second month running, markets are feeling optimistic.
Yet the underlying numbers remain timid. The latest GDP estimates for the third quarter show:
- ‑0.1 % contraction from the second quarter.
- +0.1 % growth compared to the same period a year ago.
Against this backdrop, the labour market shines. Roughly 500,000 new jobs sprang up in Q3—a 1.4 % uptick from the previous year—countering the frosty economic backdrop.
Britain’s Mixed‑Bag of Numbers
In contrast, the UK is giving us a cocktail of figures that stir both hope and concern. The Average Earnings Index + Bonus for the three months ending last September jumped 7.9 % year‑on‑year, beating expectations but falling short of the earlier 8.2 % reading. Meanwhile, the recruitment field added about 54,000 jobs, wiping out a three‑month streak of job losses estimated to be around 200,000. Unemployment held steady at 4.2 %—slightly better than the expected 4.3 %.
On the flip side, the number of unemployment claims spiked by 17,800 in October, bringing the total to 1.5679 million. That’s a jump ahead of the predicted 15,000 new claims.
Implications for the Bank of England
These figures, ripped from the last week’s data, are likely keeping Andrew Bailey and the Bank of England on their toes. No hint of a rate cut is on the agenda for the near future. The data also gave the 10‑year Gilt Yields a brief lift at 4.343 % before settling trimmed to about 4.285 %—still hovering near last month’s lows.
On the European side, bond yields are tightening their grip on the euro’s momentum. The 10‑year European Government Bond Yield hit 2.708 %, a notch above the 2.684 % low of the week. The spread relative to British bonds sits at –1.598 %, continuing a 20‑day narrowing trend. Plus, European bonds are trying to hold back the widening gap with U.S. Treasury yields, which has been expanding since April.
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