Sterling
Yesterday sterling climbed for the first time in four days against the euro and capped it's downward trajectory against the US dollar following the Bank of England's upgraded forecast for the UK economy in it’s quarterly Inflation Report. Sterling rose against the majority of its major trading partners as the incumbent Governor stated that a sustained recovery was on the horizon as he presented his last evaluation of the UK economy before Mark Carney takes over his post, indicating growth may accelerate to 0.5% this quarter. Advances for the UK currency were also helped by a report describing jobless claims in Britain to have fallen through April whilst the level of unemployment decreased. With a recent spate of good news, many hope the worst of the recession has passed, though growth is still some way off the level of five years ago. There is little in the way of influential data being released from the UK today so performance is likely to be dictated by events from elsewhere. Call in now for live rates and updated information.
The euro slid to fresh monthly lows yesterday as first quarter growth figures revealed a larger contraction than expected across the region. Economic output shrank for a sixth-straight quarter at a rate of over 0.2% whereby the prolonged recession is likely to continue to weigh heavily on the euro as speculation regarding the potential emergence of additional monetary support intensifies. A disappointingly minor recovery in Germany at 0.1% failed to offset negative growth figures in France and Italy; highlighting how European policy makers are struggling to turn improved financial market conditions into renewed business activity. The euro has still appreciated in many of it's major pairings over the last few months, but appears condemned to economic stagnation in the near future. The European Central Bank cut it's benchmark interest rate to record lows this month whilst the President of the ECB has clearly stated the bank is ready to act again if needed. Be in touch to monitor how Trade Balance and CPI inflation figures today impact the euro's fortunes.
US dollar
The US dollar traded broadly higher on Wednesday as the market's recent upward momentum persisted and offset some variable economic data. Activity in New York state's manufacturing sector unexpectedly contracted whilst US Industrial Production figures dropped by 0.5% in April. Nonetheless, consumer confidence, earnings and the Federal Reserve have been holding dollar values up and prices in most pairs continued their upward trend. US wholesale price levels meanwhile dropped through April in the wake of falling petrol prices; the biggest decline in over three years. Improving sentiment toward the US economy is fuelling speculation that the Federal Reserve will begin to reduce stimulus measures, though many believe it is exactly these measures that have been the backbone of dollar success over recent days. Today will be significant as CPI inflation data and reports on Manufacturing and Building Permits emerge: talk to your trader now to gauge market reactions and price levels.
Yesterday saw the Australian dollar continue a poor run of form this week; falling to fresh lows after eight consecutive days of decline against the US dollar. This latest slide was a response to the news that the premiums the nation's bonds offer have shrunk over the past year and although we saw a momentary climb mid-afternoon, the Aussie continued to weaken into the evening. Yesterday afternoon saw the Canadian dollar stage a recovery from a near 3-week low against its US counterpart following poor industrial production data being released in the US, and in spite of poor manufacturing data released in Canada. The Polish Zloty had a weak day yesterday, falling to a 5-week low against a poorly performing euro as inflation decelerated to the slowest rate in seven years; sparking rumours that the central bank will cut interest rates in an attempt to stimulate the economy. Last night we saw important Japanese growth and industrial production figures released, and this evening the machine orders data will be released – a good indicator of upcoming industrial output. Get in touch for the latest rates today.
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