Sterling
Sterling rose against most of its major trading partners barring the euro yesterday; finding support in the wake of house prices increasing at the fastest annual rate since 2011 and most markedly against the US dollar as weak economic releases from the world's largest economy have diluted speculation that the Federal Reserve will scale back its asset purchase programme. Bouncing back from disappointing retail sales figures on Wednesday, sterling made advances following a report from mortgage lenders nationwide showed house prices had risen 1.1% from last year. With the housing market slowly gaining momentum and the sporadic recovery in the UK continuing to head in the right direction, sterling has started to gather a little bit of momentum – the question however is whether or not sterling can maintain this strength. With lending data emerging today call in for live markets rates at Smart Currency.
The euro performed well yesterday, moving upwards across the board and notably against sterling, the Japanese yen and a weaker US dollar. Higher core bond yields and more positive debt news in periphery countries provided support for the seventeen nation currency to rally throughout Thursday though price levels in euro pairs remain very volatile. Higher borrowing costs have materialised in the wake of anticipation of the US Federal Reserve tapering back its quantitative easing strategy, though Italy sold off its maximum amount of debt it had hoped to offer. The euro has seen a mix of data released from Germany with higher than anticipated inflation data marred by much worse than expected unemployment change figures released alongside import data indicating that demand in Europe's largest economy is slowing. Other data released this week included a French consumer confidence survey which detailed another drop in the wake of France's government reforming labour laws introduced in an attempt to stop a concerning rise in unemployment. Retail sales released from Germany today will be watched closely as will French consumer spending data and euro-wide unemployment and inflation data. Be in touch today for expert feedback and live prices with your trader.
After a strong start to the week which saw the US dollar perform well with strong consumer confidence and house price figures, it fell in many of its most traded pairs through Wednesday and Thursday after the US Department of Labour reported that the number of people registering for unemployment benefit grew last week by 10,000 rather than dropping by 4,000 as forecast. The US Commerce Department meanwhile revised down first quarter GDP figures to 2.4%, down 0.1% from the preliminary reading as slower inventory building activity and cuts in government spending took their toll. With this, anticipation waned for the first time in some weeks that the Federal Reserve may continue its asset purchasing programme for the near future. However strong consumer spending figures, the highest gain since 2010, revealed that rising real estate valuations and a healthy equity market are still driving the recovery forward, with a forecast that is still positive for the world's largest economy. Inflation and personal spending figures as well as revised consumer sentiment data are released today; call your trader for up-to-the-minute feedback and trading valuations.
Elsewhere the Canadian dollar strengthened after losing ground the last couple of days, hitting a weekly high against a broadly weak US dollar as current account data showed the deficit had decreased more than previously forecast on increasing commodity exports. The Australian dollar also improved, from the lowest level in over nineteen months following positive building approvals data which grew more than estimated; decreasing the likelihood that the Reserve Bank of Australia will cut interest rates. The South African rand however dropped by 2.6% against sterling and moved under the 10 per dollar mark for the first time since 2009 – continuing from losses incurred against most of its peers over the last week. Concern that the American Federal Reserve will cut back its asset purchase programme has negatively affected demand from investors in emerging market currencies; with the rand's downward trajectory already in motion following weaker than expected growth data and comments from the President of South Africa who articulated that the recovery was running behind schedule. Overnight we saw the release of a Business Confidence report from New Zealand and crucially for the Canadian dollar later on today we will have domestic growth figures. Talk to your trader today for all global market reaction going into the weekend.
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