Sterling
Sterling had a good day yesterday strengthening against all except one of its 16 major trading partners. This was better than to be expected following the ratings downgrade by Fitch on Friday (from AAA to AA+) due to weak economic performance. The downgrade did not come as a shock although it puts further focus on the GDP data released later this week, with economists largely hopeful that the UK will marginally avoid a triple dip recession. Confidence was further buoyed by news that the Chancellor is likely to extend the Bank of England's Funding for Lending scheme aimed to boost loans for small businesses and consumers. Today we have a quiet day for GBP data release, with only Public Sector Net Borrowing and CBI Industrial Order Expectations. The critical day this week is Thursday when the growth figures for the first quarter will be released - we should expect increased volatility in the second half of this week. Call now for the latest news.
The euro had a mixed day yesterday as European Central Bank officials gave further indication that interest rates are to remain low, whilst the German Bundesbank articulated their reserved expectations for Eurozone recovery as the region struggles to return to sustained growth. Indeed, the euro may continue to suffer under this gloomy outlook and the ECB's interest rate decision in ten days' time could be very significant especially if they decide to cut it. It is hoped that the re-election of Giorgio Napolitano as Italy’s President will reduce Italian political instability but I suspect that there is still a lot of work to be done before a solid base for stability is reached. Today we have the release of the highly influential Manufacturing and Services PMI data for Europe. The current consensus is for an overall contraction in both sectors with only Germany potentially showing industry expansion in the Manufacturing sector. Call in now to see how these figures could affect the rates.
The start of the week saw the release of US housing sector reports, which unexpectedly observed a drop in home sales through March after economist's estimates that real estate sales would reach their highest levels since 2009 fell distinctly short. Despite this, the US dollar prices were not strongly affected although the US dollar did have a mixed day against major pairings. Further home sales figures will paint a clearer picture later today, though this certainly feels like a soft patch in economic data emanating from America, in contrast to the positive sentiment in the first few months of this year. Talk to your trader today to see whether this marks a turning point in price levels for the US Dollar.
Elsewhere, after the G20 summit offered little criticism of the Bank of Japan's recent monetary policy reforms recently, the Japanese Yen was well placed to push through to the key 100 mark against the US dollar in early trading yesterday. However, this target level, not seen for four years, remained untouched as the Yen strengthened through the day. There is a belief that once we breach this level we will see a further rapid depreciation in the Yen. The Swedish krona gained against most major peers on the news that the deputy governor of its central bank will resign in May after failing to garner support for further interest rate cuts. Today sees the release of key retail figures from Canada before Bank of Canada Governor Mark Carney speaks this afternoon in the wake of Canadian dollar trading at 6-week lows following poor US home sales figures. Get in touch for the latest news and up to the second rates on your currency pair.
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