Sterling dips against euro after weak figures

Sterling weakened by 0.16 cents (0.14%) against the euro yesterday to close the day at 1.1745.

• In early trading yesterday sterling hit a one-week low against the euro, after data showed UK retail sales unexpectedly fell in May, down 0.6% from the previous month. Overall, that left retail sales 1.6% lower than the same month a year ago.
  
• The pound also fell yesterday after separate figures showed Britain’s public finances deteriorated more than expected last month, with public sector net borrowing rising to a record high of nearly £20 billion.
  
• In trading so far today the pound has dipped slightly against the euro as investors continue to assess recent less positive announcements.
  
• There are no major announcements due in the eurozone or UK today.

Cable down after UK retail sales data

Sterling weakened by 0.68 cents (0.41%) against the US dollar yesterday, finishing the day at $1.6329.

• In early trading yesterday the pound initially rose on the back of improved risk appetite, before nose-diving because of disappointing UK retail sales figures. Sales fell 0.6% in May, well down on analysts’ forecasts of a 0.4% gain. That left them 1.6% lower than in the same month a year ago.
  
• Meanwhile, a Bank of England report showing that lending to British businesses fell by its biggest amount in nearly nine years in April increased selling pressure on sterling. Investors took this news as a sign the recession was far from over despite some positive data recently, with UK companies still finding it difficult to attain credit.
  
• In trading so far today the pound has made limited gains against the greenback as investors consider recent developments.
  
• There are no major announcements out in the UK or US today.

Euro dips against US dollar yesterday

The euro dipped by 0.41 cents (0.29%) against the US dollar yesterday to finish the day at $1.3898.

• In early trading yesterday, the dollar fell against the single currency after the latest Philadelphia Fed survey came in above expectations and much less negative than the month before. The index of business conditions in the US Mid-Atlantic region was -2.2 this month, well ahead of last month’s -22.6, prompting increased demand for riskier currencies like the euro as investors speculated that the world’s largest economy could be on the cusp of recovery.
  
• However, US Unemployment Claims figures released mid-afternoon stifled this optimism as they came in worse than the month before, prompting investors to head back to the safe-haven of the greenback. Jobless claims stood at 608k in May.
  
• In trading so far today, the euro has risen against the dollar as traders consider the economic releases out so far this week.
  
• There are no major announcements due in the eurozone or US today.

Aussie makes solid gains vs. sterling

The Australian dollar made solid gains against sterling yesterday, as doubts arose over the UK's economic recovery.

• UK retail sales data surprised markets by falling 0.6 percent in May, against a forecast gain of 0.4 percent.
  
• Other news also showed that Britain’s public finances deteriorated more than expected last month, while lending to British businesses fell by the largest amount in 9 years.
  
• This data has illustrated that there is still a large gap between recent investor optimism and economic fundamentals.
  
• This suggests that any economic recovery is going to be fragile and likely to be stuttering, with economic confidence and optimism likely to continue to ebb and flow on either positive or negative data.

Kiwi takes advantage of weak pound

The New Zealand dollar remained within recent ranges against the aussie yesterday, but managed to gain some ground on a weakening pound.

• The kiwi remained relatively steady as markets continue to remain cautious over higher yielding currencies, given uncertainty over the global economic recovery.
  
• With no local data due investor are likely to turn their focus to next week’s first-quarter current account and growth data.

Sterling weakens sharply vs. euro despite jobless figs

Sterling weakened by 0.97 cents (0.82%) against the euro yesterday to close the day at 1.1761.

• In early trading yesterday sterling fell by over a cent against the euro, despite better-than-expected UK Claimant Count figures out mid-morning. Those claiming unemployment benefits rose by 39,300 last month, much less than the 60,000 increase analysts had been expecting.
  
• Instead, sterling weakened on the back of the latest Bank of England minutes, which revealed policymakers felt there was no reason to change their medium-term outlook on the economy and inflation despite more encouraging data out recently. The bank voted unanimously to keep interest rates on hold and not extend their quantitative easing program.
  
• Falling UK equity markets provided little respite for the falling pound yesterday. The FTSE 100 eventually finished the day down 50.11 points (1.16%).
  
• In trading so far today the pound has continued its slide against the euro, despite UK Chancellor Alistair Darling’s announcement last night that the recession was easing.
  
• There are no major announcements due in the eurozone today, whilst in the UK Retail Sales (MoM) are out at 09.30 BST.

Sterling weakens as BoE minutes weigh

The pound weakened slightly against the US dollar yesterday, falling by 0.13 cents (0.08%) to finish the day at $1.6397.

• In early trading yesterday sterling weakened against the dollar, after minutes from the Bank of England’s latest meeting revealed no alteration in their medium-term economic outlook. This news was taken negatively by the market following some more positive data out in the past few weeks.
  
• However, the pound’s losses were capped after some better-than-expected UK employment data, which revealed an easing in the rate of unemployment. The number of people claiming jobless benefits rose by 39,300 last month, below the 60,000 increase expected.
  
• Sterling ’s falls also came despite weaker-than-forecast inflation data out in America. US CPI rose just 0.1% in May, dragging the annual inflation rate down to its lowest level since 1950. This fuelled speculation that the US Fed will rule out an interest rate rise in the medium-term at their meeting next week.
  
• In trading so far today the market remains relatively unchanged, as investors continue to digest President Obama’s financial regulation plans announced last night.
  
• In the UK, Retail Sales (MoM) are due at 09.30 BST today, whilst in the US Unemployment Claims are out at 13.30 BST.

Euro finishes up over a cent vs. US Dollar

The euro strengthened by 1.05 cents (0.76%) against the US dollar yesterday to close the day at $1.3939.

• In early trading yesterday the euro edged up against the dollar as the single currency tracked a recovery in crude oil prices. However, an initial 0.5% dip in European equities capped its gains.
  
• The dollar again slid on renewed speculation its position as the world’s premier reserve currency could be under threat. A summit involving the leaders of the emerging BRIC nations has forced the issue onto the currency agenda, particularly after Russia last week said it would cut the amount of US Treasuries it held.
  
• Disappointing US consumer price index figures, which showed a rise of just 0.1% in May, kept up the downward pressure on the greenback, as it made a US interest rate rise even more unlikely this year.
  
• So far today the euro has edged slightly higher against the dollar, while investors continue to pore over President Obama’s new regulation plans detailed last night.
  
• There are no major announcements due in the eurozone today, whilst in the US Unemployment Claims are out at 13.30 BST.

Aussie gains on profit-taking

The Australian dollar made some gains against sterling yesterday, after investors began to take profits on the pound’s recent sharp gains.

• The pound’s fall came despite a much smaller than expected rise in the UK claimant count for unemployment, which should have added weight to optimism about a British economic recovery.
  
• But investors instead focused on the Bank of England minutes, which expressed caution over the UK’s economic outlook.
  
• Further clues on the health of the UK economy will be eyed today, with the release of a raft of data including Retail Sales.

Pound falls against kiwi

The New Zealand dollar made gains against the pound yesterday, despite falling equity markets and investors remaining cautious about taking on added risk.

• The kiwi’s rise against sterling was due to investors taking profits on the pound’s recent gains.
  
• Markets still remain uncertain over the global economic outlook, which reflects the currency movement having no clear direction.
  
• The kiwi was little moved by comments from Reserve Bank of New Zealand Governor, Alan Bollard, who reiterated that the economy was likely to start growing again by the end of the year but the recovery would remain fragile.