Market focusses on Ireland stress test results
31/Mar/2011 • Currency Updates•
The sterling hit its highest price against the dollar since last Friday during yesterday’s trading.
British house prices rose unexpectedly in March as a subdued housing market outlook discouraged sellers from entering the market. The Nationwide Building Society showed Thursday that house prices rose 0.5% month-on-month – slowing slightly from the 0.7% seen in February but beating many economists’ expectations of a flat reading.
The greenback levelled off after hitting a 3 week high versus the yen on Wednesday, unable to break above the stubborn trading range seen before catastrophic earthquake.
Private sector employment in the US showed another significant increase in the month of March, according to a report released by payroll processor Automatic Data Processing, Inc., with the report showing particularly strong job growth in the service sector. The report showed private sector employment rose by 201,000 jobs in March following a downwardly revised increase of 208,000 jobs in February.
Also this morning, French President Nicolas Sarkozy and US Treasury Secretary Timothy Geithner on called for more flexible exchange rate regimes at a G20 meeting on global monetary reform in China. Speaking at the start of the talks in the eastern Chinese city of Nanjing, the pair also urged a widening of the basket of currencies underlying the IMF international reserve asset, while keeping the dollar and euro stable.
A rebound in risk helped the euro retain its momentum over Wednesday, and with investors believing that the ECB will soon seek to review its exist strategy over the coming months, the single currency may yet retrace its decline from the previous week – gaining momentum as interest rate speculation continues to gather pace.
However, with Ireland set to release the results of the commercial bank stress tests today, the euro could face a difficult 24 hours – the signs so far point to Ireland’s beleaguered banking sector requiring further capital injections as the 35 billion euros set aside by the Irish government may not be enough.
Thursday’s data is expected to show easing price pressures in the Eurozone, and the single currency is likely to trade heavily throughout the overnight session as the headline reading for inflation is expected to increase at an annualized pace of 2.3% in March following the 2.4% expansion seen in the previous month.