UK Employment Stability, Houthi Threats Lift USD, Euro’s Resilience.

UK Employment Snapshot: Stable ILO Unemployment Rate Amidst Mixed Data

The United Kingdom’s (UK) ILO Unemployment Rate remained steady at 4.2% in the three months leading to November, matching market expectations. However, a closer look at the data reveals a rise of 11.7K in jobless benefit claims in December, contrasting with a mere 0.6K increase in November. November’s Employment Change data showed a robust 73K gain, surpassing October’s 50K, while Average Earnings excluding Bonus rose by 6.6% YoY, slightly below the anticipated 6.6%. The mixed report exerted selling pressure on GBP/USD, which is trading 0.40% lower at 1.2670.

Houthi Threats Propel USD Amidst Red Sea Tensions

Yemen’s Houthi movement has escalated tensions by declaring an expansion of targets in the Red Sea to include US ships. Following recent US and British strikes on Houthi sites in Yemen, a US-owned container ship fell victim to an anti-ship ballistic missile. This development has shifted market sentiment to risk aversion, bolstering the US Dollar (USD). Atlanta Fed President Raphael Bostic advocates maintaining interest rates until at least summer to prevent inflation resurgence, cautioning against premature easing that could lead to unpredictable fluctuations.

Euro Holds Strong Amidst US Dollar Tug of War

The Euro (EUR) stands out as a top performer in Monday trading, despite a marginal retreat against the US Dollar (USD), which gains support due to escalating tensions in the Red Sea. European Industrial Production declined in November but stayed in line with market expectations. EUR traders are eyeing European Central Bank (ECB) President Christine Lagarde’s appearances at the World Economic Forum in Davos, Switzerland, as a key influence on this week’s market dynamics.