Pound:
Sterling weakens against the majors and away from highs seen in early morning trading. Growth numbers for the fourth quarter of 2009 showed the UK economy marginally emerged from the recession posting a GDP number of 0.1% significantly under the 0.4% average forecast. The UK has now emerged from its worst recession in more than 50 years providing some relief to prime minister Gordon Brown, who Labour party is significantly trailing the opposition Conservatives in the run up to the general election in June. “the UK economy is emerging from recession but there are dangerous global forces … which means that the world and the UK economy remain fragile and policymakers around the world and the United Kingdom must remain vigilant,” Gordon Brown told a news conference yesterday.
In other economic data, mortgage approvals in the UK were slightly lower than 46k forecast at 45.9k but still up on last month, highlighting an increase in housing activity. Tomorrow sees MPC member Andrew Sentance speak at 9.30am in addition to consumer spending data due at 11am. Perhaps I will give next week’s 7am spin class (at my local gym) a miss, I’m knackered!
New Labour spend to oblivion, Tories cuts to save money
US Dollar:
The Dollar was up marginally on the Dollar and Sterling after China’s tightening of monetary policy continued to support risk averse trading, and held up the Dollar against its main rivals. USD is still trading in tight ranges however, before an important week of data releases including rhetoric from the Bank of England and the Federal Reserve, the details of which could drive risk sentiment into the market if the outlook is positive, whilst supporting safer currencies such as the Dollar if negative.
The Dollar was up on its ICE Dollar Index (that tracks the Dollars price against other major currencies) at 78.372 from 78.164 preceding the week’s data. Whilst Obama’s proposals for new banking regulation has pulled back the reins of a strengthening Dollar, continued debt concerns in Europe and uncertainty in the U.K support the greenback. Bank of England Governor Mervyn King speaks today on what could be positive sentiment for the U.K economic recovery. If the rhetoric is upbeat the Dollar could be under pressure from Sterling in the near term. GBP/USD 1.6212, EUR/USD 1.4090.
President Obama Talking Jobs to the U.S. Conference of Mayors about sustaining economic growth
Euro:
The single currency was down against Sterling and the Dollar as China’s halt on lending has prompted a move away from the riskier Euro into safer currencies such as the Dollar and Yen. The Euro was still moving in tight ranges against Sterling and Dollar however as investors shied away from taking big positions ahead of the week’s economic data and central bank decisions. “The Euro upside against the dollar is going to be fairly limited while the sovereign debt issue weighs on the market,” said Michael Hewson, a currency analyst at CMC Markets in London. “I still think there’s more to come from that, not only from Greece, but also from Portugal, Spain and Italy.” Most investors agree this week should see significant movement in either direction as the data should give us further insights in to how effective various nations’ monetary policies are and have been in pushing forward the global economic recovery.”The market has a lot to focus on,” said Jessica Hoversen, fixed income and foreign-exchange analyst at MF Global in Chicago. “Traders are cautious and quiet ahead of what’s to come.” GBP/EUR 1.1495, EUR/USD 1.4090.
Quote of the Day
“Doubt whom you will, but never yourself.” – Christine Bovee