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Posted February 29th, 2016 by Charles Purdy

Lots of data releases ahead for the UK – will this help sterling?

A mixed end to the week for sterling saw it fall to a fresh seven-year low against the US dollar whilst showing a second straight day of gains versus the euro. This week we may have less focus on the EU referendum and more on the steady stream of key UK economic data being released.

This is an important week for sterling, with the release of the monthly purchasing managers’ index (PMI) figures from a number of industries. Manufacturing data will be the first of these when it is released on Tuesday. With steady growth seen since 2013, there is no expectation of any surprise in this figure. Data from the construction industry has shown strong growth over the last year, although there have been some recent surprises to the downside. Should we see the same on Wednesday, sterling could lose ground against its major trade partners. Thursday’s services PMI figures will be the most influential and are expected to show modest growth throughout the sector. Aside from this, markets will continue to react to the upcoming EU referendum, with sterling remaining sensitive to news and influences on the potential outcome.

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Posted February 29th, 2016 by Charles Purdy

Disappointing end to the week for the euro

The euro dropped to its lowest value since the start of February against the US dollar on Friday, thanks to strong US economic reports. Against sterling the euro also had a surprisingly poor morning, as it moved over 1% but the majority of this was eradicated in the afternoon. Data from the Eurozone on Friday showed that Germany’s consumer price index moved up to 0.4% in February, lower than the expected 0.5%, and down from last month’s 0.8%. This figure was actually the same as we saw this time last year.

The first main release for the week will be flash consumer price index from the Eurozone, a key figure as inflationary pressures continue to weigh on the single currency. On Wednesday Purchasing Managers Index for the euro is expected to fall again, from 52.3 down to 51 – and this is likely to cause euro weakness  and increase the likelihood of the European Central Bank increasing its program of quantitative easing in the first half of March.

Posted February 29th, 2016 by Charles Purdy

Busy week ahead for the US dollar

It was a quiet Friday morning for the US dollar, with sterling attempting to recover from its recent hits. However, with better than forecasted growth in Gross Domestic Product (GDP)  for America, as well as Personal Spending and Personal Income both growing better than expected this was short lived.

We can expect further movement this week with the all-important Non-Farm Employment Change on Friday. Leading up to this release we can expect various indications on Wednesday and Thursday, with the ISM manufacturing Purchase Managers Indices (PMI) and Non-Manufacturing PMI’s expecting mixed releases. The worry continues to be how robust is the US economy and how likely are further increases in US interest over the rest of 2016.

Posted February 29th, 2016 by Charles Purdy

Commodity currencies expected to be affected by numerous releases this week

The Aussie and Kiwi dollar have both lost some of the strength previously gained thanks to sterling’s poor performance last week.

We have a raft of information released from Australia including New Home Sales, TD Securities Inflation (year-on-year) and Company Gross Operating Profits.  We expect further movement this week, and expect the commodity-linked currencies to be negatively affected if an oil freeze on supply is confirmed this week. In the evening, we will also see New Zealand release their Terms of Trade Index.

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Posted February 26th, 2016 by Charles Purdy

Sterling struggles in the aftermath of EU Referendum announcement

Sterling struggled throughout the week following the announcement of a referendum on UK membership of the European Union. With confirmation of a June 23rd referendum date closely followed by Mayor of London Boris Johnson speaking out in favour of an exit, sterling was always going to have a tough week as investors sought the relative security of the euro (Eur) and US dollar (Usd).

With little positive economic data released throughout the week, and Bank of England (BoE) governor Mark Carney warning of the risks a ‘Brexit’ could pose to UK economic growth, the pound weakened throughout the first half of the week. There has, however, been some support found after falling to fresh 14-month lows against the euro, and a new seven-year low versus the US dollar. Although economic data has been largely overlooked this week, economic growth of 0.5% throughout the previous quarter did help sterling to arrest the downward trend on Thursday.

A quiet day across markets will see attention turn to the US, with the preliminary estimate of growth over the previous quarter.

Posted February 26th, 2016 by Charles Purdy

Inflation data today to move euro?

The euro showed very little movement throughout Thursday, finishing the day around the levels that is started at. Eurozone Consumer Price Index (CPI) data – a measure of inflation – came out slightly lower than expected at 0.3%, creating a patch of mid-day fluctuations. However, any data releases continued to be overshadowed by the continual uncertainty surrounding the future of the UK in the European Union.

Today will see the start of the G20 meetings in Shanghai and inflation data released for Germany, France and Spain. Preliminary growth figures from the US are predicted to come out lower than previously, which could result in some temporary euro strength.

Posted February 26th, 2016 by Charles Purdy

US dollar strength to be tested by growth data

It has been a strong week for the US dollar, having gained two cents against the euro and strengthened to exchange rates last seen in 2008 against sterling. This has been mainly due to sterling continuing to weaken, but also discouraging data on Eurozone’s inflation. Consumer Confidence and Flash Services Purchasing Managers’ Indices (PMIs) both tested the recent US dollar strength, with figures that did not meet expectations. Positivity returned on Thursday, with both durable goods figures and the weekly unemployment claims in-line with expectations.

Investors will be keen for today’s preliminary growth data, which is expecting to post further growth. Along with this release we can expect both Personal Spending and Personal Income data. Both are due to show growth, but any surprises could spell movement for US dollar markets

Posted February 26th, 2016 by Charles Purdy

Canadian dollar strengthens

The Canadian dollar strengthened off the back of growing corporate profit data that showed a steady growth in economic health since last quarter’s reading in November. The Canadian economy still has a long way to go, however, to recoup the losses it has seen in this area since the highs of August 2015, where the figure stood at a staggering 12.9% as opposed to today’s reading of -3.1%.

Tokyo’s Consumer Price Index (CPI) data was released overnight, with analysts forecasting slight growth from -0.1% to 0.0%. This is likely to have a positive effect on the currency. Given that Tokyo is Japan’s largest city and an economic powerhouse in its own right, this set of data overshadows Japan’s National CPI data, also released overnight. A slight decline from previous figures was predicted, but should this happen, it is unlikely to have any great effect on the currency, especially if the Tokyo figures remain positive.

Earlier this morning the Bank of Japan released its core CPI figures, with many analysts predicting a slight contraction from previous figures. Eyes should remain on the G20 meeting in Shanghai as this is likely to reveal the thoughts amongst leading bankers and economists and will more than likely have repercussions across a number of currencies.

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Posted February 25th, 2016 by Charles Purdy

Could data boost sterling today, after a run of weakness for the British currency?

Sterling took further hits on Wednesday, falling against its major trading partners as the latest polls belied a growing lead for the ‘leave’ campaign. The upcoming EU referendum continues to dominate national headlines this week, ensuring that sterling remains vulnerable to investor sentiment. Members of the ‘Stay’ campaign are reported to remain sceptical over the proposed amendments to the UK’s membership of the EU, and with no positive economic data released from the UK in recent days, sterling continues to struggle.

Today could see some respite for sterling, with the release of the second estimate of quarterly economic growth over the previous quarter. Should this show a greater than expected increase in the UK economy, sterling could gain a much-needed boost.

Posted February 25th, 2016 by Charles Purdy

Euro perks up against main competitors

The euro had a much improved day on Wednesday, again pushing up against sterling and fighting back against the US dollar. The fears surrounding the UK’s EU Referendum were again behind the increase for the euro against sterling, rather than activity in the Eurozone itself, and it was a similar story against the US dollar as slightly worse than expected new home sales data in America strengthened the euro but only marginally.

This morning we have Consumer Price Index data from Germany which was forecast to increase from last  month’s figure of 0.2% up to 0.4%. This is considered a significant figure for the Eurozone’s largest economy and could support the belief that the quantitative easing program is starting to take effect.

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