Sterling
Sterling started the week slowly with performance negatively affected by a buoyant US dollar and a UK trade report showing the country's current account position to have continued to deteriorate. By midweek however, the UK currency climbed for the first time in four days as the Governor of the Bank of England's last inflation report providing an upgraded forecast for the UK economy; indicating that growth could accelerate to 0.5% this quarter. More positivity came as unemployment claims were shown to have fallen, whilst yesterday more forecasts emerged suggesting that the economy will continue to grow at a faster rate coming into the summer than in the first quarter. With reasonable performance against the US dollar and euro going into the weekend, be in touch with your trader to see if sterling can maintain it's upward momentum despite David Cameron struggling with support from his backbenchers in parliament.
The euro has struggled to hold its own this week, falling consistently against its major peers as its economy was shown to still be in recession, with production falling for the sixth consecutive quarter. While Germany grew by the smallest of margins at a disappointingly slow rate, France declared that it had fallen back into recession with output falling by 0.2%. Yesterday, the EU's statistics office revealed that the region's annual inflation rate declined to 1.2% in April; the lowest rate since early 2010 – leaving open the question of whether Central Bank President Mario Draghi will ease policy again after officials cut their benchmark interest rate to record lows. With little data released today from the Eurozone, call your trader today to get an update on euro price levels going into the weekend.
US dollar
The US dollar fell from close to four-year highs against the Japanese yen and weakened against most of it's major counterparts yesterday following disappointing unemployment claims data, a contraction in New York state's manufacturing sector as well as weaker than forecast reports on housing and inflation. This tapered off what has been a particularly strong week for the currency which rose in the wake of good retail sales figures on Monday and expectations the Federal Reserve might scale back their asset purchasing activity, though this now may have proved to be presumptuous as dollar prices weakened following yesterday’s developments, leading many to the conclusion that the Federal Reserve will continue with it's bond purchasing monetary easing programme for the time being. Watch out for consumer sentiment figures emerging today, though next Wednesday's slew of reports will be most significant with results from the Federal Open Market Committee's meeting. Be in touch for prices and reactions as they happen.
Elsewhere, the Australian dollar had an extremely poor week, struggling on the back of the annual budget release and weak data coming from China resulting in the Australian dollar hitting fresh eleven-month lows against the US dollar - fuelling rumours the Reserve Bank of Australia would continue to cut interest rates to further support the economy. The Japanese yen continued to struggle this week; falling to five year lows beyond the 102.00 level against the US dollar as the G7 meetings confirmed expectation of further consolidation for the Japanese yen following the government's ground-breaking monetary policy programme. Some of these losses were then reversed following better than expected growth figures from Japan being released. The end of the week's focus will be on the Canadian Dollar which has variable week based on weak internal data and figures released from the US. Friday sees core inflation data released along with retail figures coming from Canada: be in touch going into the weekend to keep up to date with world developments and currency price levels in your pairings.
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