Sterling
Sterling has sailed upwards against most of its major counterparts this past week as Purchasing Managers Index figures exceeded expectations with the construction, manufacturing and now service sectors all expanding at better rates than expected. Yesterday the Bank of England opted to keep monetary policy on course for the time being with interest rates being left on hold at 0.5% - still a record low, whilst the UK's asset purchase programme has been left unchanged at 375 billion pounds. The UK currency found significant gains throughout Thursday against its US dollar counterpart as it broke through the 1.5600 level late afternoon to the highest point in 4 months. Indeed, this was the quickest gain against the dollar since 2009 as central bank Governor Mervyn King conducted his last policy meeting amidst a renewed sense of optimism surrounding the economy. With rising house prices sterling could still find support coming into next week – be in touch with all upcoming developments and live prices with your trader.
It has been a characteristically volatile week for the euro: with Cyprus' credit rating sinking deeper into junk bond territory as ratings agency Fitch downgraded the country to a B-minus and both Italian and Spanish service sectors continuing to contract whist Latvia was given the green light to adopt the single currency under pervading economic gloom surrounding the Eurozone. Indeed, earlier in the week Producer Price Index data described a contraction of 0.2% - the first reduction for over three years and speculation heightened that interest rates could be slashed again as the European Central Bank met yesterday. Borrowing rates however were kept level accompanied by central bank President Mario Draghi speaking out confidently that Europe's economy should start recovering this year and that there was no need to introduce additional stimulus for the time being. Euro's mirrored sterling by finding four-month highs against the dollar as the seventeen nation currency found support from reassured investors, though whether the region and currency values can remain positive in the longer term remains to be seen. Call in now to monitor progress and for any trading requirements coming into the weekend.
The US dollar came under pressure this week after disappointing private sector employment figures diluted speculation that the Federal Reserve will taper back its quantitative easing programme this year. Gains in dollar value from strong Consumer Sentiment data from last week were relinquished as weak manufacturing sector figures and the disappointing report from payroll processor ADP fuelled uncertainty over the fate of quantitative easing ahead of today's key unemployment data release. The US currency traded lower yesterday against most of its major counterparts; dropping to four-month lows against both sterling and the euro. Benefit claims information yesterday however were shown to have having fallen, indicating businesses are gaining confidence demand will survive federal budget cuts. Attitudes surrounding the economy's recovery though have dampened slightly over recent days and much focus will be on Non-Farm Employment Change and Unemployment Rate figures as the Federal Reserve has identified the job market as key to influencing monetary policy this year. Talk to your trader as events transpire and for up to the second prices.
Elsewhere this week the Australian Dollar has had a torrid time; falling for a third day against its US counterpart on Thursday, the currency has been a clear underperformer in world currency markets recently and pressure is likely to keep building in the wake of worse-than-forecast national account figures emerging earlier in the week. The data sparked speculation over further interest rate cuts from already record lows, with some economists are even predicting two cuts in borrowing prices before the end of the year which would tap more value out of the currency. The Canadian dollar meanwhile, after a slow start to the week, performed well yesterday after the newly appointed Governor of the Bank of Canada gave his first address to lawmakers since taking office. Markets reflected his positive tone as he put confidence in Canadian export strengthening and oil prices recovering from recent dips in value. The Japanese yen also has also had a stronger week in response to equity markets falling. The selling off of stock saw the yen fall back below the hundred mark against the US dollar; a trend which accelerated yesterday with a bout of dollar weakness. Important employment statistics emerge from Canada later today – monitor progress in your currency pair with your dedicated trader going into the weekend.
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