Sterling
Sterling performed relatively well yesterday strengthening close to a six-week high against the US dollar on the back of positive UK data. It also made gains against the Euro but then lost ground throughout the afternoon. Along with positive retail sales levels being released, industrial output and manufacturing figures both came out better than forecast; supporting the belief that the UK will avoid a triple-dip recession. Recent positive data indicates the UK could now be moving towards a slow but sustained recovery, as a result, some traders feel that the Monetary Policy Committee may promote a more neutral stance for the rest of the year. We may see an increasing number of central bank officials take a more constrained attitude towards credit and monetary policy. That being said, the new Governor of the Bank of England starts his tenure in July and is renowned for his accommodative stance on monetary policy. Today and indeed this week it is reasonably quiet for sterling news, call in now for the latest live rates.
The euro performed strongly yesterday, showing modest gains over the majority of its major counterparts - most notably in regard to the US dollar against which it was trading at monthly highs by the end of the afternoon. Political pressure may act as a catalyst for further growth as Spanish officials encouraged expansionary measures to address fragmented capital markets, and the US Treasury Secretary implored Spain and surrounding countries to adopt policies that foster consumer demand in the face of stagnant growth and inflation. On the data front German trade figures beat expectations but showed a marked reduction in exports whilst imports also dropped whilst French data showed that their trade gap had widened. The European Central Bank, for its part, is increasingly showing a willingness to reduce interest rates to record lows, and the Governing Council may follow through on its easing cycle in the near future. This morning will see the release of French Industrial Production Data which should give an indication of wider EU economic health. Get in touch for the latest rates.
The US dollar struggled to hold its ground on Tuesday weakening against the euro and sterling although it did fall from close to its four-year highs against the yen. Some investors feel that the Federal Reserve’s monetary policy may evolve to favour tighter controls and a more restrictive credit policy as the central bank seems to be gradually straying from its quantitative easing cycle with expectations for economic growth on the rise. This evening will bring light on this as the minutes from the Federal Open Market Committee's meeting are released and should shine a light on deeper economic conditions influencing their vote on interest rate levels. Other data released today will include the Federal Budget balance figures and we will also have a 10-year bond auction. Be in touch for the latest updates.
Elsewhere, after declining rapidly for four days, the Japanese yen strengthened against the US dollar and moved away from the four-year low of 99.66. The general decline of the yen is still expected to continue as the aggressive quantitative easing takes hold, but yesterday saw a brief respite as traders appeared to reflect on what has been a significant movement. The poor performance of yen and the dollar in the last few days has caused an increase in risk appetite from which the Australian dollar has benefited seeing it strengthen against the majority of its trading partners. The Thai baht was the stand-out performer of the Asian currencies yesterday, rising to its highest level against the US dollar since 1997. However, there are some concerns that the currency has strengthened too quickly of late and the Bank of Thailand may alter policy in future in order to slow down its rise. Data released today in Japan regarding monthly machinery orders and monthly unemployment data from Australia will have an impact on the currencies going forward. Call in now for live rates and up to the minute information.
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