Sterling
Sterling has had a tough week, having dropped sharply against both the euro and US dollar since Monday, falling by nearly two cents at their lowest point. Yesterday however further slides were averted; bouncing back from the lower than anticipated inflation data and disappointing retail sales figures released on Monday and Tuesday respectively as the updated release of the GDP figures for the first quarter confirmed the economy had expanded at 0.3%. Home asking prices rose for a fifth consecutive month this week which also helped sterling. Monetary Policy Committee meeting minutes revealed Mervyn King had been outvoted again on the issue of increasing quantitative easing, though in light of lower inflation contributing to sterling weakness many expect incoming Governor Mark Carney to have more leeway to expand the asset purchase programme. Be in touch with your trader today for the latest information going into the bank holiday.
With bank holidays in Germany, France, and the Netherlands at the start of the week it has been a relatively quiet period for economic news emanating from Europe. The single currency held fairly steady against its major trading partners though as the region still struggles with economic and political instability weakness especially against the safe haven currencies is still expected in the longer term. The European Union Economic Summit in Brussels had mixed impacts on the markets, with monetary policy being highest on the agenda and ministers have been putting continuing pressure on the central bank to further support stimulus programmes. French and German monthly manufacturing and services data yesterday, although still showing overall contraction, came in slightly better than the previous month bolstering the euro towards the end of the week. Today sees the release of German Business Climate figures with the health of Europe's economic heart pivotal in dictating currency strength across the seventeen nations. Call your trader now for developments going into the weekend.
US dollar
The US dollar has remained broadly strong this week against all it's major trading partners. The Federal Reserve Chairman spoke out midweek and encouraged speculation that the central bank would be prepared to taper back it's asset purchase programme going forward if it can be confident the economic recovery can be fully sustained. His focus however was on the difficulties posed by government spending cuts and especially unemployment, whereby tightening monetary policy too early would jeopardise the recovery. Minutes from the Federal Reserve's latest meeting corroborated that sentiment, though jobless claims data released yesterday came out more positively than expected which is likely to fuel expectation that quantitative easing activity could be scaled down in the near future. Today sees the release of figures on durable goods orders. Analysts expect strong performance in data releases over the coming weeks to maintain dollar momentum. Call in today for reactions, news and price levels with Smart.
Elsewhere, the beginning of the week looked better for the antipodean currencies with the Australian Dollar rising for the first time in 3 days against the US Dollar, whilst the New Zealand dollar rose against all of its major currency partners on the back of good home purchase data. The New Zealand finance minister the suggested that the central bank may look at raising interest rates which caused the New Zealand dollar to gain against the majority of its peers. The Japanese yen had a turbulent week following comments from Japan’s Economic Minister who said that further losses to the currency’s value would start to have negative effects on the Japanese economy whilst stating that the currency had fallen far enough. The yen carried on weakening however after the Bank of Japan affirmed a plan to double it's monetary base over a two year period. Yesterday however, the Japanese yen snapped this trend and surged against all of its major trading partners whilst the Japanese stock market tumbled over 7% over 24 hours as investors started to panic about the state of the global economy. The Canadian Dollar had little joy following disappointing retail sales data for the month of March raising speculation that the central bank will move to reconsider its plan to raise interest rates. In other news the South African Rand tumbled heavily on news that interest rates would remain at 5% for the foreseeable future. Call your trader today for news and price levels in your currency pair.
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