Will UK data help Sterling bounce back
Charles Purdy, director of Smart Currency Exchange, said: “After a very difficult week for Sterling, there are a number of key releases over the next few days that will determine whether sterling can bounce back or whether the downward trend will continue.
“The first big data release is set to be tomorrow’s Consumer Price Index (CPI) data, which serves as one of the most important indicators of levels of inflation in the UK. As inflation can be a driving force behind the timing of interest rate increases, the outcome of these monthly data sets often has a considerable impact on sterling performance. Analysts predict that we will see figures of around 1.8%, only marginally behind the Bank of England’s target of 2%. On Wednesday we will find out how the Monetary Policy Committee voted on the most recent interest rate decision. We expect to find that the decision was unanimous and any other result could spur sharp movements in sterling’s favour. Finally, on Thursday monthly UK Retails Sales figures will be released. US Retail Sales data last week demonstrated the extent to which this data set can affect the performance a currency in the short-term and an unexpected result could have a similar impact on sterling.
“If you are looking to buy or sell sterling, we suggest contacting your trader now for live rates, news and currency-purchasing strategies”.
Despite gains against sterling, euro still under pressure
“Despite parts of Europe enjoying a bank holiday on Friday, the single currency managed to make moderate gains against sterling and the US dollar. There has been little data to improve the economic outlook for the Eurozone over the last few days, yet the euro has avoided further severe weakening against major currencies and has made considerable ground against sterling.
“Influential events are weighted towards the end of the week this week, with Thursday and Friday likely to provide the most impetus for rate movements. Monthly manufacturing data is due from France and Germany on Thursday. Even the Eurozone powerhouses seem to be losing momentum of late, and key indicators such as manufacturing figures will help to determine whether output is indeed flat-lining or whether there is hope yet for the stalling recovery. We end the week with an address from European Central Bank (ECB) President Mario Draghi, in which he may shed some light on his take on the precarious state of economic affairs, as well as provide potential insights into future monetary policy decisions.
“If you are looking to buy or sell euros, we suggest contacting your trader now for live rates, news and currency-purchasing strategies”.
Lots of data this week which could sway the US Dollar
“With a strong start to the month behind it, the US dollar stalled on Friday due to conflicting data from the states. After trading within a wide margin against the euro throughout the week, the US dollar weakened significantly on Friday as consumer sentiment data came out worse than expected.
“The first major release during the week ahead comes tomorrow, with core inflation released in the afternoon. The next major release comes in the shape of the Federal Open Market Committee (FOMC) meeting minutes on Wednesday. This will provide an in-depth insight into FOMC members’ view of the US economy, and could drive further US dollar strength. With unemployment claims and existing home sales released on Thursday, the US dollar is in for a week which could see significant movement.
“If you are looking to buy or sell US dollars, we suggest contacting your trader now for live rates, news and currency-purchasing strategies”.
Safe haven currencies benefit from uncertainty
“Friday saw a flow of capital towards safe-haven assets, with confidence dropping from the market amid reports from the Ukraine of an attack on a Russian convoy. As a result, we saw the traditionally low-risk currencies perform well, with the Japanese yen and the Swiss franc both logging gains. Similarly we saw riskier, emerging-market currencies take a tumble as traders got cold feet, selling off the likes of the Turkish lira and South African rand.
“The Canadian dollar strengthened on Friday following revised employment data, which came in well above the previous figures.
“Looking forward to this week, it’s poised to be an interesting few days for the Canadian dollar this week with wholesale sales, retail sales, and inflation data out this week. Other releases of note will be Australian monetary policy meeting minutes, and Chinese manufacturing industry figures“.