Sterling
Sterling struggled on Tuesday - falling to a two week low against the euro and continue to tumble against the US dollar for the fourth consecutive day. This was on the back of speculation that investors have cut their holdings in the currency leading up to the Bank of England's quarterly update on inflation forecast (it will be current Governor Mervyn King's last.) This slip was despite UK house prices being shown to have climbed to the highest level in 3 years. Meanwhile, Prime Minister David Cameron impending intention to authorise a referendum for UK's continued membership in the European Union caused further weakness to sterling as questions surrounding long-term political stability were thrown into focus. Today we will see data evaluating the change in unemployment claimants and significantly the Bank of England's inflation report. Speak to your trader now for prices and feedback on sterling activity.
The euro performed poorly yesterday in response to German Economic Sentiment data coming out worse than forecast amidst the backdrop of political unrest emanating from the Economic and Financial Affairs Council meeting. The single currency dipped in most pairings after the report from Germany was released as it is seen as a key barometer for the health of Europe's largest economy. Uncertainty continues to reign in the Eurozone; weighing on the currency as the EU continues to struggle with a resolution for the monetary union. There is a still talk that the ECB may implement negative interest rates in the near future and increase quantitative easing, whereby speculation surrounding these possibilities is likely to amplify any poor data coming out of the region in the coming days and weeks. Today's flash GDP data is likely to have a short-term impact and help to determine whether the euro will continue to forfeit some of the ground that it has recouped in the past month. Call in now for upcoming information and live rates.
US dollar
The US dollar continued its impressive start to the week yesterday; maintaining momentum over the majority of it's major trading partners in the wake of better than expected retail sales figures having been released at the start of the week. It was also the fifth successive day of gains against the Japanese yen - the longest streak since November. The data added fuel to rumours that the Fed will slow the pace of bond purchases under its quantitative easing stimulus strategy; tapering off as the nation's economic prospects continue to improve. Import price data for April also contributed to dollar strength, coming in lower than expected, which should reign in inflation levels for the second quarter of the year. Today sees the monthly industrial production and direct foreign investment rates published. The most significant news, however, will be the monthly Purchase Manager's Index inflation report surfacing around lunchtime. Be in touch with Smart and your dedicated trader for the latest rates as the markets react.
The Australia's dollar continued to fall yesterday, reaching fresh eleven-month lows against the US dollar following the annual budget release. The government revealed a forecast for slower than anticipated growth – adding to speculation that the Reserve Bank of Australia will cut interest rates further to support the economy. The currency has had a torrid month; losing four cents in two weeks against the US dollar as the central bank's rate cut last week surprised markets and falling further due to the revelations yesterday morning of a record deficit. Despite some decent retail sales data released early on Tuesday, the New Zealand dollar followed their Australian counterpart on a downward trend whilst the Canadian dollar fell to it's lowest point in two weeks against the US dollar as it continued to adjust from a run of particularly strong performance in recent months. Today’s main release will be the Manufacturing Sales data from Canada, so be in touch now for how the latest prices and developments.
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