Please click on table to enlarge
Tuesday 24 March 2009
A good day for the pound....
GBPEUR: 1 week chart. Please click on chart to enlarge
GBPUSD: 1 week chart. Please click on chart to enlarge
GBPJPY: 1 week chart. Please click on chart to enlarge
GBPAUD: 1 week chart. Please click on chart to enlarge
GBPNZD: 1 week chart. Please click on chart to enlarge
UK inflation hits 0%, lowest level in 49 years
It was announced in the UK this morning that the Retail Price Index (RPI) measured inflation at 0.0% in the year to February. This is the first time in 49 years that inflation has fallen this low and came as a result of a 0.9% fall on the month. The Consumer Price Index (CPI), a measure of inflation which excludes mortgages, currently stands at 3.2% on the year.
These results are better than expected as many investors were expecting RPI as a measure to fall below 0.0%. The pound has shown good strength in this morning’s trading against a basket of major currencies as this news, as well as improved risk appetite from yesterday’s announcement in the US, sees demand for the pound remain firm. The US government’s Public-Private Investment Programme has buoyed investor confidence and stock markets around the world continue to perform well.
The pound currently stands 1.70% up on the euro and 1.15% up on the US dollar. A market update will follow this post with full data.
These results are better than expected as many investors were expecting RPI as a measure to fall below 0.0%. The pound has shown good strength in this morning’s trading against a basket of major currencies as this news, as well as improved risk appetite from yesterday’s announcement in the US, sees demand for the pound remain firm. The US government’s Public-Private Investment Programme has buoyed investor confidence and stock markets around the world continue to perform well.
The pound currently stands 1.70% up on the euro and 1.15% up on the US dollar. A market update will follow this post with full data.
Risk appetite sees pound strengthen over euro
Sterling regained further ground against the single currency yesterday, following improved risk appetite in markets. This has come following the announcement in the US that they are set to adopt a $1 trillion plan to free banks of toxic assets – investors reacted with enthusiasm to the plan as equity markets around the world rose, with the FTSE 100 up by 2.9%. In early trading today the pound is continuing to rally, as risk appetite remains following a rally on Asian stock markets overnight.
Investors will take note of the UK’s February inflation data today, with the Consumer Price Index expected to fall further towards the Bank of England’s 2% target. The Retail Price Index is expected to turn negative for the first time in nearly 50 years, with the Consumer Price Index expected to follow in the summer as the UK flirts with a period of deflation.
The eurozone releases their PMI manufacturing and services data this morning, but expect GBP / EUR to take direction off equity markets today.
Investors will take note of the UK’s February inflation data today, with the Consumer Price Index expected to fall further towards the Bank of England’s 2% target. The Retail Price Index is expected to turn negative for the first time in nearly 50 years, with the Consumer Price Index expected to follow in the summer as the UK flirts with a period of deflation.
The eurozone releases their PMI manufacturing and services data this morning, but expect GBP / EUR to take direction off equity markets today.
US bank plan benefits pound
The pound strengthened over the US dollar by 0.98 cents in Monday’s trading to close the day at the 1.4572 level. The US government yesterday announced a $1 trillion plan to free the US financial system of toxic assets and investors welcomed the news enthusiastically. The FTSE 100 jumped 2.9%, the Dow Jones 6.8% and the S&P 500 7.1% as investors speculated that the ‘Public-Private Investment Program’ would benefit the global economy in the long term. The plan aims to take $100 billion from the ‘Troubled Asset Relief Program’ and leverage this to $500 billion using low-interest loans and guarantees from the ‘Federal Deposit Insurance Corporation’ (FDIC) and the Federal Reserve (Fed). It is then hoped that this will encourage private investors to take part in the scheme, and the US government has confirmed that there is scope to potentially expand the program to buy $1 trillion of toxic assets. This money will then be split and used in two different ways, first to buy toxic credit securities from bank’s balance sheets and second to buy and remove bad loans. With the dollar’s safe haven attraction eroded, the pound was able to post gains, however the dollar’s slide was pared after better than expected existing home sales were announced in the US.
In today’s trading the pound has continued to strengthen over the US dollar as yesterday’s announcement continues to see demand for the dollar as a safe haven fall. Later today consumer price index and retail price index data is announced in the UK. In the US housing price index figures will be announced, as well as data from the Richmond Fed Manufacturing Survey and the ABC/Washington Post Consumer Confidence Survey.
In today’s trading the pound has continued to strengthen over the US dollar as yesterday’s announcement continues to see demand for the dollar as a safe haven fall. Later today consumer price index and retail price index data is announced in the UK. In the US housing price index figures will be announced, as well as data from the Richmond Fed Manufacturing Survey and the ABC/Washington Post Consumer Confidence Survey.
Euro undermined against dollar
The euro weakened against the dollar yesterday following the release of a larger than expected trade deficit for the eurozone. Data released by Eurostat showed that the eurozone recorded a trade deficit of €10.5 billion in January, widening sharply from a revised €1.7 billion deficit in December. The euro fell to a four-day low of 1.3485 against the dollar. Last week it hit a 2 and a half month high of 1.3738.
European Central Bank President Jean-Claude Trichet said in a Wall Street Journal interview that the central bank could lower its interest rate further, which at the moment is at a record low of 1.5%. However, he also said he does not see any impending need to modify current stimulus plans.
There are several significant announcements taking place in the eurozone this morning, including Purchasing Manager Index Manufacturing and Current Account data at 09.00 GMT. In the US, Housing Price Index, Retail Price Index and the Richmond Fed Manufacturing Index will be released at 14.00 GMT.
European Central Bank President Jean-Claude Trichet said in a Wall Street Journal interview that the central bank could lower its interest rate further, which at the moment is at a record low of 1.5%. However, he also said he does not see any impending need to modify current stimulus plans.
There are several significant announcements taking place in the eurozone this morning, including Purchasing Manager Index Manufacturing and Current Account data at 09.00 GMT. In the US, Housing Price Index, Retail Price Index and the Richmond Fed Manufacturing Index will be released at 14.00 GMT.
Improved risk appetite benefits Aussie dollar
The Australian dollar reached near 10 week highs against sterling yesterday, as higher stocks boosted demand for risk. This helped the aussie further, with it being one of the world’s higher yielding currencies. Sterling still remains under pressure due to its continuation of quantitative easing. It was also not helped by comments from BoE policy maker, David Blanchflower, who stated that Britain's economy may not recover this year and unemployment was likely to continue to rise rapidly. Investors will today focus on UK inflation data. One of the arguments against quantitative easing is that it is likely to build inflationary pressures, however this data will be too early for any possible affects to be seen.
Kiwi dollar continues march
The New Zealand dollar remained well supported yesterday as US plans to relieve banks of toxic debt increased investor optimism. Rising equity markets are increasing demand for riskier assets, helping support the kiwi; however, analysts remain skeptical that this support will remain for very long. Global economic conditions continue to remain tough and poor readings from domestic data due later this week may start to weigh on the kiwi.
Subscribe to:
Posts (Atom)