Dollar boosted by positive labour data as market awaits rate decision

Tom Tong07/Mar/2013Currency Updates

GBP

Despite better than the expected data out of the UK, Sterling ended down against its major counterparts.
Positive data – BRC shop index print index showed a 1.1% increase in Feb, which was higher than the 0.6% growth in January Furthermore the Halifax price index increased by 0.5% in Feb, higher than the 0.3% decline in Jan.
Focus toady will be on the BOE’s monetary policy decision at 1pm. Investors will be paying attention to see if the BOE extends its asset purchase programme.

USD

Safe heaven inflows and positive labour data boosted the USD yesterday. A report showed US private employers added 198,000 jobs in Feburary while the ADP National employment figures showed a gain of 170,000. Furthermore January’s private payrolls were revised upwards to 215,000 from 192,000.

In other news, new orders for US factory goods fell 2% as opposed to 2.2% in January and the commerce department reported orders for durable goods fell from 4.9% as opposed to 5.2%. Furthermore the Feds Beige Book showed that policy makers were in agreement that a modest recovery is in motion supported by a continued uptake in housing numbers.
Today trade balance figures for February and initial jobless claims are released. The trade balance is expected to widen from 38.5 billion USD to 42.8 billion in Jan, indicating to a down turn in exports in the month. Weekly jobless claims should report a 354k increase in first time claimants, a lower figure would boost the USD and add to already positive employment figured ahead of non farm pay rolls tomorrow.

EUR

The Euro fell against its major counterparts in anticipation to today’s ECB meeting. Despite being in the midst of recession and despite the political instability in Italy interest rates are likely to remain as they are. However the press conference following the meeting may see Mario Draghi make comments on inflation, growth and future easing. His comments will be closely watched.

Yesterday also saw the release of revised GDP figures which confirmed that the euro area economy contracted almost the most in four years in Q4 2012. In the calendar year the economy shrank by 0.9%. The Euro rallied slightly towards the end of play as S&P upgraded Portugal’s outlook from negative to stable.

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Written by Tom Tong

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