Sterling
Sterling had a poorish day yesterday, weakening against the US dollar and against the euro. Positive data from the Confederation of British Industries revealed the first rise in UK retail sales for 5 months, benefitting sterling in the morning. Whilst these figures were better than expected, overall sales volumes are still relatively low and growth is expected to slow in August so the effect of this data was limited. Sterling fluctuated to a degree during the rest of the day, largely in response to events elsewhere. The Monetary Policy Committee's August statement released on Thursday is likely to be the most influential release of the week as traders look to assess how much credence to give the notion of a sustainable recovery in the UK. Any hints as to alterations in monetary policy will impact significantly on Sterling performance as traders look to the statement for an indication of intent. There is little being released in the way of influential UK data between now and then so investor speculation and events elsewhere are likely to drive market movement. Call your trader now to monitor sterling performance.
Euro
A quiet day for the euro yesterday. Markets are tentative ahead of the Central Bank's rate decision on Thursday, and with no significant releases of data, the euro held ground against the majority of its peers. It lost ground against the US dollar, however, as markets speculate that the Federal Reserve will possibly announce plans to reduce stimulus later this week. Today should see a little more movement from the euro, with retail data coming out of German acting as a good inflation indicator, and quarterly GDP data coming out of Spain. However, expect markets to continue on a cautious note as we look towards Thursday's rate decision.
US dollar
The US Dollar appreciated against most of its major trading partners yesterday afternoon in response to better than expected Pending Home Sales data and increased speculation that the Federal Reserve will taper its bond-buying programme this autumn. Whilst the figures did reveal a decline, this decline was not as big as expected after reaching the highest level in over six years in June. Speculation surrounding a reduction in asset-purchasing came following better economic data and more positive data will further contribute to this trend. Crucially, the Federal Open Market Committee's statement on Thursday is likely to go some way to encourage or discourage further speculation to this effect. In the meantime this afternoon's Consumer Confidence data, another leading indicator of economic health, is likely to cause short-term market movement if figures differ greatly from expectations. Call your trader to see whether the dollar comeback is imminent.
Worldwide
Elsewhere, the Canadian dollar had another strong day yesterday, rising for the third consecutive day and climbing against the majority of its major peers. The strong performance was down to crude oil, the nation's biggest export, trading above $100 a barrel for the 18th day in a row. The performance is concluding a strong month for the Canadian currency, which has logged gains of 2.5% against its US counterpart this month. The Japanese yen was also a standout performer, with a 3% plunge in the Japanese stock index leading to a hike in demand for the safe haven currency. Strong monthly retail sales were also a catalyst for the yen's strong performance. The New Zealand dollar struggled yesterday, losing out against the majority of its most traded peers, as the Prime Minister, John Key, claimed that it was 'overvalued' and that the government would welcome a slide. Overnight eyes were on Australia, with monthly building approvals statistics being followed by a statement from the central bank governor. Later today we have monthly raw material prices data out of Canada, a good overall inflation indicator. Get in touch for live rates.
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