Positive Data out of the US and Europe while GBP lost ground ahead of BOE Governor Mark Carney's speech today
28/Aug/2013 • Currency Updates•
Yesterday saw sterling lose ground against both the Euro and the Dollar with expectations on the horizon that BOE Chief Mark Carney may perhaps down talk market interest rates and support his dovish stance forcing the pound to fall 0.3% against the Greenback, it’s lowest since mid-August. Carney will give his first speech today in Nottingham.
It is suspected that he will defend his policy of forward guidance as markets seem to remain unconvinced that the scheme will keep rates low. Some analysts are saying that if the market does not follow with Carney’s policy then he may be forced to push for more quantitative easing to clarify how he believes his policy should affect the market.
Data expected out of the U.K includes the CBI distributive trade survey, expected to improve from 17 to 20 but all eyes will be focused on Carneys speech later this afternoon.
Recent evolutions in Syria, particularly in regard to the use of chemical weapons by Assad’s regime, is bringing the realistic prospect of armed intervention into the region. While this may not have a quick effect on the markets it should be watched as it will certainly affect the world’s economies if it comes to fruition.
Yesterday’s main data regarding the euro was the German IFO Tier 2 figure where Business Climate came in 0.5 more than expected at 107.5 and IFO Current Assessment which came in at 112.0, 1.1% higher than forecast. The only relevant data out today is the Consumer Confidence survey which is expected in at 7.1. This fourth consecutive rise will be good news for chancellor Angela Merkel with growth returning, consumers upbeat and inflation under control the economy is largely on track.
Angela Merkel also reiterated last night that Greece is weakening the Eurozone after admitting that Greece will need another bailout and raising fears amongst the Germans that they will have to foot the bill
All eyes this week will be on German Unemployment rate released out on Thursday morning which will give more of an indication on the economy.
As tensions in Syria grow, the dollar has strengthened against most of its 16 major counterparts. Data yesterday came out better than expected – The Richmond manufacturing index climbed from -11 to 14, showing that the industry expanded this month. To add to this the CB consumer confidence index climbed from 81.0 to 81.5, out performing the consensus at 79.6.
Today on release we have USD pending home sales. Special attention will be focused on the crude oil inventories report which will show how the conflict in Syria is effecting oil stockpiles.