Major movements across the board
27/Feb/2014 • Currency Updates•
Sterling had a mixed day to say the least, moving in opposite directions against the euro and dollar. After the GDP release yesterday morning the pound moved 0.3% to the upside against the single currency, ending the day back at levels seen two weeks ago. It was the direct opposite against the dollar, losing a similar amount over the morning session.
GDP figures were of course the highlight of the economic calendar yesterday, coming in pretty much as expected. Quarter on quarter figures showed an expansion of 0.7% for the last three months of 2013, and annualised figures registered 2.7% growth for the year. Despite this figure being 0.1% lower than estimated, the estimated figure was extremely punchy and the truth is that 2.7% is a very strong reading, which puts the UK near the top of the tree for growth amongst developed countries.
Sterling buyers will have have to wait until next week for any more positive information to back up the strong GDP readings, as data out of the UK dries up significantly heading in to the tail end of the week.
No data of note due today.
The single currency had a poor day yesterday, dropping off against both the pound and the dollar. The sell off was uninterrupted over the course of the session, losing 0.4% and 0.7% respectively.
The fall came despite German consumer confidence coming in above expectation. Perhaps investors are learning to look beyond the eurozone powerhouse at the fragile group of companies it protects.
The euro is under pressure at the moment after a recent run of bad data, so markets will be watching Friday’s inflation report with interest. Inflation is probably the most important measure in the eurozone at the moment, as the ECB will be heavily swayed in its interest rate decisions by the reading. Any further fall could well prompt Mario Draghi to enact his threat of zero or negative interest rates in the near future.
Today is the most interesting data day of the week for the euro, with raft of data including German unemployment, Europe wide industrial confidence and economic sentiment, German inflation and bits from Italy and Portugal, among other things.
It was a solid performance from the greenback, taking points from all its major pairs. It took the best part of a cent off the euro in early trading, while scoring half a cent on the pound.
Data was mixed, as an increase in new home sales for January of 468k, 68k above expectations, was mirrored by a fall in mortgage applications by 8.5% in Feb.
Today is a much more important day for the US, as a raft of key data is due to be released. We have durable goods orders, continuing and initial jobless claims, as well as a speech from Janet Yellen. Although on the face of it the durable goods orders is the key figure, markets have recently started to pay much closer attention to central bankers’ speeches. Ms Yellen is expected to address the recent poor data as she testifies before congress, and her rhetoric will be key for investors trying to second guess the Fed’s tapering plans.