US Companies added more workers than previously forecasted in payrolls in January. This shows that labour market conditions are improving with employment up by 187,000 jobs according to the ADP employer services. These kind of gains are needed if the Fed’s policy goal to reduce the unemployment rate in the US is to be achieved.

Economists are arguing that there is a clear pattern of positive news events indicating a recovery in many key sectors of the US economy. The recovery is starting to accelerate which is very good news for the Western World. The US economy is often seen as a leading indicator to the rest of the West, markets now hope that the positive sentiment will help the global economy pick up as a whole.

The pound has surged today after the CIPS construction survey indicated expansion. The figure rose to 53.7 from 49.1 in December, a figure above 50 indicates expansion. The CIPS commented that the improvement in weather conditions will have helped the gauge to climb. The pound extended gains and has now put significant ground between the current trading position and the psychological 1.60 level. Tomorrow sees the key services PMI data, the market bulls seem to be expecting a positive figure with traders eyeing the November 2010 peak at 1.63 mark if the news is announced as expected.

The Euro has lost ground today on the news that the S&P rating services have downgraded Ireland’s credit rating from A to A-. They also indicated that further cuts in the future could be necessary. This prompted a return of the concern over sovereign debt risk in the Eurozone ahead of tomorrows ECB rate decision.

If you have a currency requirement or would like to discuss the markets please don’t hesitate to contact me.

Best Regards
Luke Zorab
Torfx Currency Dealer

“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”