German output dips. Stocks retreat from 2 week bull run

Claire Hogarth08/Jul/2014Currency Updates

GBP

London closed with Sterling fairly flat across the board with no real data or events driving the market. Slight dip against the greenback and minor rise against the Euro. Overall a sedated day trading with markets shaking off the hangover from US Independence day. A quiet Asian session with trading mostly range bound.

Also a sedated affair in stocks – the FTSE retreated from its bull run of the past fortnight with poor German industrial production figures taking the blame for the reversal.

The British Chamber of Commerce was making noises in the BoE’s direction yesterday amid a backdrop of firms increasingly concerned over the prospect of higher borrowing costs affecting business growth prospects. The BCC said any rate rise should be delayed until the recovery is firmly established. Fresh news from the labour market shows it is very much a job hunters market right now – starting salaries are peaking at 17-year high as a growing skills shortage has forced employers into a bidding war for talent.

Data of note today includes – Industrial and Manufacturing production figures set for release at 9.30 BST.

EUR

London closed with the Euro dipping across the board following poor German industrial output hitting market confidence. The figures showed output falling at its fastest rate in 2 years. Naturally the weaker than expected figures will raise some concerns regarding the strength and stability of the recovery in Europe. It also reflects the wider sings suggesting a weaker Q2 for Europe’s largest economy.

German and French trade balance and import/export figures came out this morning; the numbers were nothing special and have failed to provide any Euro support.

Although there is no shortage of Euro bears they are yet to come out to play, the next few weeks will be key with all eyes on the ECB. Draghi has already said he is ready to do more to inject growth into the economy and the market will be waiting to see exactly what this means.

No additional data out of the Eurozone today.

USD

London closed with the greenback ticking up against both Sterling and the Euro.

Right now across the board the dollar remains steady and has held most of the gains stemming from last weeks strong NFP print. US Treasury yields have slipped from recent highs after Wall St turned cautious with the approach of Q2 earnings season next week.

Presently the dollar index is seeing little volatility, due to the Fed stance on QE becoming increasingly clear, most of the focus now is on whether the timing and pace of QE will change, if market opinion shifts then one would expect fresh swings.

Data of note today includes the Redbook index and the results of a business optimism survey.

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Written by Claire Hogarth

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