US Dollar news:
The USD is trading lower this morning against the pound and flat against the Euro as concerns surrounding the US economy intensify. Unemployment figures released yesterday highlighted a slight rise in the number of newly unemployed in the US, initial claims was forecast at 465k but came in at 484k.
The telegraph newspaper reported that repossessions of house and flats by major US banks is close to an all time high as the housing market continues to struggle, with major banks writing off approximately $8bn on mortgages the first three months of 2010. We are due a raft of US macro economic data this afternoon starting with Core CPI at 1.30pm , this is the main measure of inflation in the US , and forecast at 0.1%. We also have retail sales data due at the same time, which is expected to show a pick up in consumer spending from –0.1% last month to 0.2%. Later on today in addition to other economic data, federal reserve bank of Kansas president Hoenig is due to deliver an important speech on the US banking sector which is likely to provide clues on the future path of interest rates and monetary policy.
Pound news:
The pound is continuing to trade higher against the USD this morning as confidence in the US economy continues to deteriorate. The pound is currently trading at 1.5643 vs the USD still away off the 1.5993 level we saw only last week. The UK has been quiet on the macroeconomic front in the last day and there is no data scheduled today, despite this, there is still a reasonable amount of concern floating around the market over the economic recovery.
The telegraph reported this morning that more families will lose their homes as the government reduces the amount of financial support it provides to borrowers as part of it’s wider plan to reduce the public deficit. The main highlight of this week has been the release of the Bank of England quarterly inflation report which reduced UK growth forecasts and expects inflation to fall below the 2% target. This has done little to support sterling longer term as the market once again anticipates further monetary policy loosening rather than tightening and therefore a reduced chance of interest rates rising any time soon. Watch out for rightmove house price data and UK CPI due out early next week.
Euro news:
The Euro is continuing to trade weaker against the pound this morning but has made some small gains of around 0.25% against the USD. Economic data out this morning highlighted the German economy grew by 2.2% in the three months to the end of June, the fastest quarterly growth in 20 years (nearly my lifetime). One of the main reasons for the aggressive rise in growth has been down to a weaker Euro, encouraging trading partners to purchase products manufactured in the member state. In addition to a strong contribution from exports, household and government spending also helped boost growth. We are also due the latest GDP (growth) numbers for the Euro-zone at 10am. Have a smashing weekend.
Quote of the Day
Carpe diem — “Seize the day”
