UK retail sales disappoint as Moody's focus on UK credit rating whilst jobless claims creep up in the US
16/Nov/2012 • Currency Updates•
After the government report showed that retail sales declined more than forecast in October, the pound fell to a two week low against the euro. Things were not better against the dollar as sterling reached the weakest point in more than two months. This was mainly influenced by the Bank of England’s signals that it had not ruled out extending a program of asset purchases to stimulate the economy. Sterling has dropped 2.9 percent in the past six months and more bad news was added as Moody’s Investors Service said it would assess the UK’s Aaa rating at the beginning of next year as the economy slows.
The dollar declined against the euro for a second day as US jobless claims rose and a regional manufacturing index decreased after the devastation by Hurricane Sandy. Applications for jobless benefits increased by 78,000 to 439,000 in the week ended Nov. 10. As for the data that was released; the core CPI reading showed the biggest increase since June, core prices were up 2% for the year through October, the same as in the 12 months through September. Today there is only some second-tier data in which the TIC report for September is expected to show that foreign demand for long-term US securities outpaced demand by 75 billion dollars. Along with that, the industrial production report for October is seen to print a 0.2 per cent uptick.
Yesterday data from Brussels confirmed that the Eurozone tumbled back into an official recession in the third quarter of the year. Data from the Eurostat office saw Eurozone GDP dip 0.1 per cent in the three months to September, the second straight quarter of contraction following a 0.2 per cent fall in the three months to June. On a brighter note Italian Finance Minister, Vittorio Grilli is confident that euro-region finance chiefs will reach an agreement on aiding Greece when they meet next week. Granting Greece more time was the latest compromise in the three years of crisis fighting as creditors led by Germany opted to keep money flowing instead of risking a default.