Markets calm, how long will it last? | Smart Daily Currency Note

Sterling

Sterling, had a mixed day yesterday, starting off on the front foot by making gains against the majority of its trading partners before losing ground in the afternoon. Data released yesterday showed the first revision to the UK’s fourth quarter GDP figures which fleshed out the details of the 0.3% contraction seen during that period – with exports and imports both falling sharply. Sterling also enjoyed a temporary lift after one of Monetary Policy Committee (MPC) members from the Bank of England (BoE) quashed the idea of negative interest rates being introduced. With little data expected to be released from the UK today, the markets will most likely look elsewhere for influence. Call now for the latest updates on sterling.

Euro

Bond traders were clearly unfazed by news that the Italian comedian-turned-politician Beppe Grillo had rejected calls from the leader of the country's democratic party to form a coalition majority, as Italy achieved its target in yesterday's bond auctions. The euro was spurred by the news, as well as a report showing that economic confidence had improved last month, to gain against the dollar for the first day in three. Last night heard the President of the European Central Bank once again talking up the state of the Eurozone, saying that "we should build a strong and deep economic union in Europe"; whilst, at the same time stating that the ECB is far from exiting from stimulus measures. Today sees the release of both German and Eurozone Consumer Price Index data as well as consumer spending and employment releases, key fundamentals which will either support, or highlight the weakness in recent statements. Get in touch now for the latest news and rates.

US dollar

The US dollar had a mixed day yesterday struggling in the morning but regained some of its losses in the afternoon. Positive Core Durable Goods Orders, rising by the highest rate in a year, and Pending Home Sales data both came out much better than expected. In his testimony the Federal Chairman suggested the benefits outweighed the negative with regards to the central bank's asset purchasing program. The testimony gave no signs that the Fed may slow or even stop monetary easing, in spite of recent murmurings that the central bank may look to taper asset purchases. The Chairman also maintained pressure on Congress to act to prevent the USD 1.2 trillion of spending cuts that are due to start taking effect from March 1st reminding the Committee of the Congressional Budget Office’s forecast that US growth will be adversely affected by around -0.6% this year, and the labour market will lose 750k jobs, if the spending cuts are maintained throughout the whole year. Today we have Preliminary fourth quarter GDP data – expected to show 0.5% annualised growth - and the weekly unemployment claims coming out of the states. Call in now for the latest news and live rates.

Worldwide

Elsewhere, the Japanese yen was the stand out performer yesterday as risk aversion dominated the market due to political uncertainty in Italy. The Australian dollar struggled yesterday after worse than expected construction data was released whilst the commodity backed currencies struggled in general. Overnight we saw the release of business confidence figures from New Zealand whilst we saw a raft of data out of Australia including figures showing the change in the level of new capital expenditures made by private businesses. Later on today we have inflation data and current account figures from Canada. Call in now for a market update and a live quote.