One good day for Sterling and then back to reality | Smart Daily Currency Note

Sterling

Sterling had a torrid day yesterday, undoing the positive gains it made on Monday. Sterling dropped to a 8 month low against the US dollar and weakened back towards 1.15 against the euro. This move came in spite of much better than expected Services Purchasing Managers Index (PMI) data being released showing the industry was expanding again when a slight contraction had been anticipated. There is little data expected to be released today bar figures showing the change in the price of homes. With sterling weakening and back down at historically  low levels against both the US dollar and the euro, call in now to see if this trend is continuing.

Euro

After a poor start to the week on Monday, the Euro’s bubble appears to have not completely burst, performing well against the majority of currencies yesterday. On the data front, better than expect services PMI data was released across Europe (bar the Italian reading). The French President warned that a strong currency could deepen the recession and called for exchange rate policy to be implemented, however, the German Economy Minister rebutted this idea saying the focus should be on economic strength, not currency weakness. Such disagreement would normally reflect in low prices, instead the markets seem to have chosen to believe that the European Centrals Bank policy makers are not as concerned with the strong euro as the French President and that interest rates will remain unchanged on Thursday. Today will be quiet in terms of data bar the German factory orders figures, and markets will be focussing more on the Economic Summit starting on Thursday where we can expect more of the same positive rhetoric from Eurozone politicians which is likely to continue to support prices. Get in touch now for an up to the second exchange rate, and the latest news. 

US dollar

While the US dollar had a mixed day yesterday, weakness elsewhere drove it to highs against the Japanese yen and sterling - trading consistently over 93 yen for the first time since the spring 2010, and the highest against sterling since August 2012. Services PMI data released yesterday came out as expected showing an industry expansion figure of 55.3 Once again today there is a dearth of data released so expect it to be a day for reaction from news released elsewhere once more. However, one to watch is the release of the Crude Oil Inventories coming out this morning, which can have a direct impact upon inflation and economic growth, especially given the recent talk of Shale Gas reliance in America. Call in now to for a live market quote and further news and analysis. 

Worldwide

Elsewhere in the world, the Japanese yen dropped to its weakest level in three years against the US dollar thanks to the Bank of Japan's Governor stating that he plans to step down early; accelerating a transition that may aid the new Prime Minister's monetary easing plan. Going south of Japan, the Australian dollar had a tough day yesterday, falling against all of its major peers after the central bank signalled it is prepared to cut interest rates to a record low later this year. The Russian rouble had a strong day yesterday following the surge in the price of oil per barrel yesterday. The South African Rand performed well following data that was released showing that the unemployment rate has fallen nearly 25% in the fourth quarter and after the mineral resources minister said the government would not nationalise the mines. Overnight we saw the release of retail sales data from Australia, Canadian PMI data will be released in the afternoon and New Zealand will release unemployment data in the evening. Call in now for an update and live market quote from your trader.