Sterling
Sterling ended yesterday at around the same level as the start of the week – firming up hopes that last Thursday's growth figures could be the catalyst for a sustained period of recovery. Indeed, both Manufacturing and Construction Purchase Manager's indices (PMI) exceeded expectations and although both continued to indicate a slight contraction, the data was enough to support sterling against most of its major peers. More positivity came as a report from the Bank of England revealing that British banks had eased housing credit restrictions and granted more home loans through March in excess of what many had predicted. Today sees the last of purchasing manager's indices released with a small increase forecast for the services industry. Be in touch with your trader to see if sterling can find further gains into the long weekend.
The biggest story of the week came yesterday in a pivotal day for the euro. After nervous early trading, the European Central Bank (ECB) announced that interest rates would be cut to a record low of 0.5%. The widely anticipated move did little to affect the relative strength of the euro as it was largely “priced in” to the market. It was the comments from the ECB President in the press conference that followed which caused the euro to fall sharply after he said that there was scope not only for a further cut in rates, but even that he would '...keep an open mind on negative deposit rate.' The unexpected revelation caused the euro to plummet by over a cent, exaggerated by a further extension to the unlimited liquidity policy. Today is not likely to have as much influence on price levels. However as traders digest the fallout from the interest rate decision and the President of the ECB’s comments we have economic forecasts from the EU. Get in touch now for up-to-the-second developments on euro prices.
The US dollar had a mixed week as a raft of data was released alongside comments from the Federal Bank who reiterated its commitment to keeping monetary policy ultra-loose until the labour market recovers to such an extent that the overall rate of unemployment drops to 6.5% (now around 7.5%). With mixed labour data released so far this week, all eyes will be on today’s figures where we will see the release of the highly influential non – farm payroll data alongside the overall unemployment rate. The US Trade Deficit meanwhile shrank 11% to 38.8 billion dollars; it's second lowest level in three years as imports dropped by the greatest margin since early 2009, with the decrease in the trading shortfall with China being a major catalyst. Call in now to speak to your trader and for an update on the market.
Elsewhere, the major focus this week has been on the release of China's PMI data which showed the world's second largest economy grew at a slower rate throughout April than expected as China appears to be slowing down following the first quarter of the year. Australian and New Zealand dollars were particularly affected; though the Canadian dollar found a foothold yesterday with a ten-week high against the US dollar and strengthening against most of its major peers. The Russian rouble struggled yesterday, falling especially against the US dollar as a result of crude oil prices dropping in value by the most in 2 weeks. The Swedish krona also had a poor day, falling for the first time in a week as the manufacturing data released yesterday showed production declining in a country that has weathered the recession well in previous months. Get in touch at any point to see how price levels are moving in your currency pair.
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