USD rallies on strong data and S&P closes at record highs

Claire Hogarth28/May/2014Currency Updates

GBP

London closed with sterling flat against the dollar and dipping against the euro. The Asian session has seen a sterling sell off with sterling slipping against the euro and dollar. London opens with plenty of buying interest on sterling dips and it could prove a choppy day for the pound.

The steam chain of recent mortgage approvals appears to have slowed. Stricter lending regulations appear to have taken the steam out of the housing market; mortgage approvals are down for a third month on the bounce. The number of approvals for house purchases is now sat at an 8 month low.

Elsewhere the UK, the job market remains strong with graduate positions close to record highs. The taxman will also be in a good mood, with a crackdown bringing revenues to record levels. Eyes were again on the Bank of England yesterday as Carney spoke in the city and joined the noises calling for bankers to stop misbehaving. He commented on the recent scandals in commodity and currency markets and said the malaise must be remedied; his comments following similar lyrics from the IMF.

Only data of note today is a CBI trade survey.

EUR

London closed with the euro trading down against the dollar and slightly up against sterling. A slip off against the dollar stemmed from the greenback taking leverage from widespread strong US data.

Speaking in Portugal, Draghi said the European Central Bank remains aware of the risks from prices remaining too low for too long and that the bank had various tools to get inflation back to its 2% target. We maintain our view that some action in June is likely, if inflation forecasts are revised lower, which it looks like they will be. The Eurozone issues its May flash inflation data on June 3rd with the street calling a 0.7 increase. If this comes in, one would expect action in the next ECB meeting.

Heavy day for data in the Eurozone today. The key play will be German employment figures set for release this morning, also set for release, money supply, industrial confidence figures and services sector sentiment.

USD

The US eagle showed its talons yesterday in what was a strong day for the dollar and US stocks. Across the board the dollar scuttled up and US stocks shot up with leverage taken from widespread strong data leading an increased bullish sentiment. The greenback held support and saw further gains over the Asian session, London opens with the dollar remaining well supported.

US data yesterday was all good, Manufacturing orders unexpectedly rose in April and consumer confidence increased in May, supporting views of a rebound in economic growth. Orders for durable goods also rose and consumer attitudes are increasingly positive. It would appear the effect of the savage weather has abated and with the sun shining, people are splashing the dollars. All of this led to a bullish day for equities with the S&P 500 closing at a record high.

Data of note today includes the Redbook index, mortgage applications and we also have a bond auction.

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Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.