Sterling
Sterling's relatively steady performance yesterday may have come as a surprise to many, as the much anticipated Autumn statement highlighted just how fragile the UK economy still is. With the statement preceded by much weaker than expected Services Purchase Manager Index (PMI ) data - a figure of 50.2 suggests the sector is only just continuing to grow - one would have been forgiven for expecting sterling to fall versus its major trading peers. In fact sterling managed to break a consistent decline versus the euro, and continued to gain ground versus the US dollar and the Japanese yen. This comes in spite of the Office for Budget Responsibility prediction that the economy will contract by -0.1% this year and the Chancellor confirming the UK would miss its debt-to-GDP target. It appears that much of this bad news was “priced in”, hence the muted response from the market. Today sees the release of further influential data, with decisions by the Bank of England on asset purchases and the central interest rate. Forecast to remain constant, any change is likely to significantly affect sterling, so call in now for the latest news.
Euro
Sterling's relatively steady performance yesterday may have come as a surprise to many, as the much anticipated Autumn statement highlighted just how fragile the UK economy still is. With the statement preceded by much weaker than expected Services Purchase Manager Index (PMI ) data - a figure of 50.2 suggests the sector is only just continuing to grow - one would have been forgiven for expecting sterling to fall versus its major trading peers. In fact sterling managed to break a consistent decline versus the euro, and continued to gain ground versus the US dollar and the Japanese yen. This comes in spite of the Office for Budget Responsibility prediction that the economy will contract by -0.1% this year and the Chancellor confirming the UK would miss its debt-to-GDP target. It appears that much of this bad news was “priced in”, hence the muted response from the market. Today sees the release of further influential data, with decisions by the Bank of England on asset purchases and the central interest rate. Forecast to remain constant, any change is likely to significantly affect sterling, so call in now for the latest news.
Euro
The euro had a mixed day yesterday, losing ground on the back of a number of poor sets of data in the morning including a less than impressive benchmark 10-year Spanish bond auction. European retail sales data was also particularly poor as was the Euro-area wide services PMI data that was released. Prices staged a small rally later in the day as Eurozone finance ministers expressed their optimism over the 10 billion euro Greek bond buyback program, a crucial element of the recovery plans. Today the European Central Bank announces interest rates, paramount for currency valuation. No change is expected, but expect markets to react to the press conference held afterwards as the ECB indicates the path going forward. Get in touch now for the most up to date news and rate.
US dollar
The US dollar stayed fairly range bound yesterday against sterling whilst strengthening slightly against the euro, mainly attributed to markets in Europe rather than any positivity from the US. Unemployment data released yesterday was marginally worse than expected and lends its hand to Friday's highly influential non-farm pay rolls release. More unemployment data is being released later today and the number of new people claiming unemployment benefits is predicted to have fallen slightly from last week's reading. Non-manufacturing PMI data announced yesterday was slightly better than expected; but, the focus in the US remains on the looming fiscal-cliff. Obama's first time interview since his re-election, discussed in depth the fast approaching influential fiscal cliff. Obama declared that he will make no deal on the country's fiscal future unless congressional leaders first accept an increase in tax rate for the country's top earners. This continuing disagreement between the Democrats and Republicans may cause the US dollar to strengthen as investors seek safer havens for their money until there is some sort of resolution. Call in now to discuss what might happen with your trader.
Worldwide
Elsewhere, the Australian dollar performed badly yesterday with the GDP data coming out worse than expected, showing a slowed economy in the last quarter, partially due to tighter government spending and also the lowest consumer demand in 2 and half years essentially validating the interest rate cut decisions made by the central bank. The Japanese yen remained weak especially compared to the US dollar due to the on-going political worries ahead of December 16 elections. Overnight we saw the release of the Reserve Bank of New Zealand's decision on interest rates with the market forecasts suggesting a hold at 2.50%. Building permits and PMI data will be released from Canada today on what is otherwise a fairly quiet day. Any unexpected data will cause volatility so call in now for the live rate and news.
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