Sterling
A good morning for sterling yesterday as 'economic rock star' Mark Carney took the reins at the Bank of England and Purchase Manager Index (PMI) figures exceeded expectations, showing growth in UK manufacturing for the second consecutive month. Market reaction to the release was fairly muted and sterling weakened through the afternoon to finish close to 1.1650 against the euro. Today sees further PMI data, this time from the Construction sector. After finally breaking into the positive last month, good news would certainly lend support to a struggling pound, but whether it will be enough to sterling remains to be seen. At the very least, expect volatility in the run up to these releases. Call your trader now to see how sterling is doing today.
The euro performed relatively well yesterday, gaining half a cent against the US dollar on the back of improved manufacturing PMI figures – in particular from struggling Spain and Italy. While they failed to break the near two year trend and still showed a contraction, the release was the best in 16 months and markets viewed it as perhaps the first small step towards recovery. Eurozone unemployment however was up on last month reaching record highs of 12.1% and it means today's data showing the change in Spanish unemployment will be watched with greater interest than normal. With little data released today, markets will look ahead to Thursday's European Central Bank meeting as the key for this week. Get in touch with your trader now for the very latest on the euro.
Following a strong performance last week, the US dollar showed some weakness yesterday falling against most of its major currency pairs including sterling and the euro. This was on the back of lower than expected construction spending and manufacturing PMI figures. Moreover, the employment section of the manufacturing PMI was shown to be contacting for the first time since 2009 (perhaps a precursor to poor non-farm employment change this Friday). This negativity indicates that perhaps the Federal Bank is further away from tightening monetary policy than the central bank had initially indicated. That being said, this weakness could only be short lived if we see further signs that the economy is on a sustainable path to recovery, or indeed if we hear more comments made about tapering the quantitative easing program from members of the Federal Open Market Committee. Call your trader now for live rates and news for the US dollar.
Elsewhere, the Japanese yen had a difficult day yesterday, falling against all major peers. The drop in value came in spite of a quarterly survey showing confidence in the manufacturing sector has improved for the first time in two years. The Japanese yen weakness would indicate a small risk rally as the commodity backed currencies all performed well at the same time. The Australian dollar was one of the stand out performers yesterday, recovering from a 34-month lows against the US dollar through Sunday night. The lows seen on Sunday night were a knock-on effect of worse-than-expected manufacturing data out of China, which did not do any favours for the already-struggling Aussie dollar. The New Zealand dollar also recovered well from the decline seen towards the end of last week. Overnight we saw the Reserve Bank of Australia (RBA) keep interest rates on hold which had the perverse effect of weakening the Australian dollar against sterling. Get in touch to find out if the Aussie dollar fairs throughout the rest of today, as well as all other live rates.
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