Sterling
Sterling had a more positive day on Friday, recovering a little of the ground lost earlier in the week and indeed some analysts are starting to suggest the Bank of England may be looking to slowly move away from their easing cycle, which could help sterling retrace it's decline from earlier this year. Fresh evidence emerged on Friday that the UK housing market recovery is underway with mortgage approvals rising by 2.4% through April, though this remains below the levels seen before 2008. The report said that the government's Funding for Lending scheme continues to support the market – particularly for first time buyers. This coming week will be relatively quiet for significant UK economic releases; with only data showing the net lending to individual and realised sales figures expected to be released alongside comments from several members of the Bank of England. Perhaps no news will be good news and sterling can bounce back from recent lows as speculation increases as to tighter monetary policy. Contact your trader to find out whether sterling can find momentum.
Euro
The euro found strength before the bank holiday after an industry report revealed that German business confidence increased beyond expectations though May – increasing optimism for the region's recovery prospects after German and French manufacturing data emerged more positive than expected last week. News from Germany will be dictating the currencies performance once again this week with preliminary inflation figures and unemployment change data due on Wednesday. Spanish and Italian benchmark ten-year bond auctions will be a gauge of investor confidence in weaker economic zones whilst German and French retail sales and consumer spending reports are published on Friday. Other notables releases this week includes Eurozone wide inflation data as well as figures showing the overall level of unemployment across the Eurozone - currently expected to have increased to 12.2%. Stay on top of how the euro is performing by calling your trader now.
The US dollar found further strength before the bank holiday following news that durable goods orders increased more than forecast as the world's largest economy continues on the road to recovery. The US dollar could well continue it's strong performance into this week and beyond as speculation increases about the potential for the Federal Reserve to taper off their quantitative easing programme. Historically, an improving labour market was the catalyst for the central bank ending programme of monetary easing and with positive jobless claims data having emerged last Wednesday many believe the Federal Reserve will start to think about slowing the pace of asset purchasing in the near future. On the data front this week, Tuesday sees the release of monthly consumer confidence data which will give an insight into how the US retail sector is recovering. We are likely to see a degree of volatility on Thursday in response to a host of data being released including the change in the number of people claiming unemployment related benefits, pending home sales figures and preliminary quarterly GDP data which is currently expected to show that the worlds largest economy grew by 2.5%. Call in now for a live rate with Smart and to keep up to date as the week progresses.
Elsewhere, the Canadian dollar struggled before the weekend – notably against it's US counterpart after speculation increased that the Federal Reserve could taper back monetary stimulus this year. Canada's biggest export crude oil declined in price and as commodity values continue to fall the Canadian currency is expected to underperform. Wednesday's Bank of Canada interest rate decision will be crucial to the Canadian dollars strength this week, at present no change is anticipated; however, the statement that follows should give clues for monetary policy decisions going forwards and could well set the tone for Canadian dollar prices going into the summer. Alongside the monetary policy decision, we also have a raft of data released from Canada including inflation data, current account figures and GDP data which is currently expected to show the economy only grew by 0.1%. The decline in commodity prices has also hit the Australian dollar, which along with recent evidence of the Chinese economy slowing has fallen throughout May. This Thursday, Australian Building Approvals figures will be significant as well as Private Capital Expenditure data which should provide early signals of future hiring, spending and earning activity. Other data released this week includes business confidence figures from New Zealand, manufacturing data from China and a raft of data from Japan including a speech from the Governor of the Bank of Japan which will be watched extremely closely given the recent movements in the Japanese yen. Call in now for a live price and for a market update.
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