Sterling gains for second consecutive day ahead of US employment and GDP figures
30/May/2013 • Currency Updates•
Sterling gained some ground over USD as poor data was released in the form of mortgage applications. As for the data out of the UK the CBI realised sales report printed below expectations, as the index dropped from -1 to -11 instead of posting a rebound to 4 as many had predicted. What this reflects is that retail sales fell at its fastest pace in over a year. The month of May saw big drops in food and drinks, as well as clothing and footwear, which led to overall sales volumes to fall below average for this time of year.
From the Bank of England, policy maker Charlie Bean showed signs of concern for the economy in his speech yesterday. He said that the country’s high debt levels and weakness in exports might weigh down the country’s growth prospects.
Today we have seen the Nationwide HPI data come in at 0.4%, lower then the expected 0.5%. Later on today the GfK consumer confidence report is expected to rise from -27 to -25.
Yesterday the USD slipped against all of its major counterparts during the Tokyo session. One explanation could be that with equities falling, traders may have felt inclined to reverse their positioning in higher-yielding assets.
One reason equities fell may have been due to downward revision by the OECD. The group now believes that global growth will be 3.1% in 2013 and 4% in 2014, down from initial forecasts of 3.4% and 4.2%. More specifically, US growth is projected to be at 1.9% in 2013 and 2.8% in 2014. The 2013 number was revised down slightly from 2.0%; this may give the Fed more reason to keep current QE measures in place for the meantime.
Today there is a whole bundle of data being released; first at 13.30 BST the preliminary GBP report and weekly unemployment claims figures will be made available. The GDP report is largely expected to stay the same at 2.5%, as for the jobless claims its projected to come in at 342,000 just slightly above last week’s rolling average of 340,000. A much better than expected result could allow USD to recuperate some of its losses from yesterday.
The new approach symbolised by yesterday’s ECB Economic recommendations for each of the countries in the eurozone has been called many things, but once the rhetoric has been stripped away any chances that remain are largely semantic. The eurozone remains on the same path, at most progressing along at a more leisurely pace.
Germany’s government bonds advanced for the first time in four days. Previous surveys expect the economic activity in Spain to have contracted 0.5 % inter-n quarter and 2.0% on an annual basis during the first quarter. Further results in the euro are will see the E.M.U.s sentiment ahead of the Italian auction of bonds maturing in 5 and 10 years.
There are a number of data points to be released today including consumer confidence. The previous level for this was -22.3. However the current consensus is that it will rise to -21.9 In addition to this the Economic sentiment indicator looks to rise from 88.6 previously to a consensus of 89. These figures, while showing slight strength for the euro, are still not incredibly positive and show that the eurozone is still managing to fight the effects of the permacession poorly. Unemployment in Germany rose by 21,000 in May which is the biggest monthly rise in four years whilst the total amount of jobseekers reached a high of 26.9 m.