In another quiet day for GBP/EUR trading, the single currency made up some of the losses that it suffered earlier in the week. Sterling came under pressure as the FTSE 100 had a sluggish day, finishing 0.1% lower after it gained some support from Wall Street later in the day, as investors remain cautious about taking on too much risk ahead of the Easter Weekend. The single currency’s gains were reigned in, however, as recent economic news has been so poor from the eurozone. News out of the UK was little better, as consumer confidence slipped in March as people worried about rising unemployment during the recession.
The major economic news today will surround the Bank of England’s interest rate decision due at 12.00 BST. The Caxton FX analysts are forecasting that the central bank will keep rates on hold at the record low of 0.5%, whilst continuing the quantitative easing programme that commenced last month, as the Monetary Policy Committee looks for signs that their drastic action is taking affect.
Trade balance figures are also released within the UK this morning, alongside the Producer Price Index giving an indication of inflation at present. Germany also releases its industrial production figures, an industry that has been particularly hard hit for them in the past 12 months.
Thursday 9 April 2009
Pound little changed against the US dollar
The pound enjoyed a small rally against the US dollar yesterday morning, as a brief rise in equity markets encouraged some investors to buy back into the riskier pound. However, sterling gave back its gains sharply in the afternoon when US shares pared most of their gains, following the US Treasury Department’s outline of its plans to aid insurers. But the dollar’s recovery was undermined somewhat by the minutes from the FOMC yesterday evening, which suggested an economic recovery was not expected until 2010, compared with its previous estimate of the end of this year. The pound therefore closed the day little changed against the dollar following this choppy trading.
The Bank of England concludes its two-day policy-setting meeting this afternoon, and is widely expected to leave interest rates on hold and continue its £75 billion bond buying scheme. The BoE has already cut interest rates to a record low of 0.5 percent, so it has little room to manoeuver further cuts.
Other news today includes Trade Balance figures and the Producer Price Index from the UK, while in the US Jobless Claims, the Import Price Index and Trade Balance figures are all released this afternoon.
The Bank of England concludes its two-day policy-setting meeting this afternoon, and is widely expected to leave interest rates on hold and continue its £75 billion bond buying scheme. The BoE has already cut interest rates to a record low of 0.5 percent, so it has little room to manoeuver further cuts.
Other news today includes Trade Balance figures and the Producer Price Index from the UK, while in the US Jobless Claims, the Import Price Index and Trade Balance figures are all released this afternoon.
US dollar trades mixed against the euro
The dollar strengthened against the euro yesterday before weakening off last night following the release of the Federal Open Committee’s minutes from their previous meeting in March. The minutes indicated that the members were almost unanimous in stating that economic conditions had deteriorated relative to their expectations at the time of the January meeting. The members also stated that a fall in foreign economic activity was of particular importance, as this was having an adverse effect on US exports.
Anxiety over upcoming quarterly results and company forecasts have affected the market this week, resulting in a fall in the Dow Jones industrials with a nearly 3 percent loss over the past two days. Additionally, the Commerce Department announced Wednesday that wholesale inventories fell by 1.5 percent in February, the highest on record and more than double analysts' expectations.
In the eurozone, Germany's Federal Statistical Office announced exports to countries in the 27-nation European Union fell 24.4 percent, while exports to non-EU countries dropped by 20.6 percent.
In the eurozone, Germany will be announcing their Industrial Production figures at 11.00 BST whilst in the US Jobless Claims, Import Price Index and particularly important Trade Balance data will be released at 13.30 BST. Additionally, the Bank of England’s interest rate decision is due this afternoon.
Anxiety over upcoming quarterly results and company forecasts have affected the market this week, resulting in a fall in the Dow Jones industrials with a nearly 3 percent loss over the past two days. Additionally, the Commerce Department announced Wednesday that wholesale inventories fell by 1.5 percent in February, the highest on record and more than double analysts' expectations.
In the eurozone, Germany's Federal Statistical Office announced exports to countries in the 27-nation European Union fell 24.4 percent, while exports to non-EU countries dropped by 20.6 percent.
In the eurozone, Germany will be announcing their Industrial Production figures at 11.00 BST whilst in the US Jobless Claims, Import Price Index and particularly important Trade Balance data will be released at 13.30 BST. Additionally, the Bank of England’s interest rate decision is due this afternoon.
New Zealand dollar steady despite risk aversion
The New Zealand dollar remained relatively steady yesterday, despite investors remaining reluctant to take on any further risk. Weak business confidence data released on Tuesday has lent weight to the argument for further rate cuts, with many analysts now forecasting a 50 basis point cut by the Reserve Bank of New Zealand when they next meet on April 30. The kiwi’s main direction for the shorter term will come from equity markets, particularly with the start of the US corporate earning season.
Australian dollar remains range-bound
The Australian dollar remained within recent ranges against sterling yesterday, as investors remain reluctant to take on more risk leading into the Easter break. Market focus today will be largely centred on the BoE's interest rate decision, due at 12.00 BST. Interest rates are expected to be held at 0.5 percent with a continuation of the central bank’s planned quantitative easing.
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