Hello and welcome to the Pure FX market report for Monday 21st February 2011!
US
The US dollar lost against most major currencies on Friday as the outlook for most non-US currencies improved.
For instance the euro jumped on comments from ECB board member Lorenzo Smaghi that the ECB could increase interest rates to combat global inflation pressures. Sterling meanwhile improved on strong retail data that showed sales increased 1.9% in January compared to a -1.4% loss the month before.
There was no major data from the US to affect rates – but these releases were enough to bring the dollar down.
EU
In the EU Lorenzo Smaghi of the Executive Board of the ECB said on Friday that the bank might be forced to raise interest rates to combat global inflation. Prices for raw materials and foodstuffs are rocketing across the planet presently. This buoyed the euro on Friday because higher interest rates mean higher returns for investors.
This morning meanwhile there has been a spate of economic data from Germany. The German manufacturing PMI jumped to a record high of 62.6 in February according to new reports compared to 60.3 forecasts. The manufacturing PMI is an important indicator of the German economy so the news could really boost the euro.
In addition the German services PMI has also been released this morning. This came to a two month low of 59.5 against forecasts of 60.3
UK
In the UK meanwhile retail sales saw a major recovery on Friday after calamitous data in December. Sales for January jumped to 1.9% following a month in which they shrank -1.4%. The December decline came about owing to terrible weather rather than UK economic conditions. Nonetheless the markets were relieved at news of the recovery.
This morning meanwhile the latest house price index from Rightmove has shown the UK housing market is improving. The index jumped 3.1% in February compared to a 0.3% increase last month. This is a pretty minor economic release but could nonetheless boost sterling.
CA
The Bank of Canada released data showing that inflation was unchanged during January – remaining at 1.4% against forecasts of 1.5%. This proved negative for the Canadian dollar because low inflation decreases the odds of an interest rate hike, and high interest rates attract investment.
Coming Up
It’s a packed day for European data. Later on IFO is scheduled to release the German business climate and current assessment data. The EU services and manufacturing PMIs are also scheduled to be released.
21 February 2011
US Dollar Falls On Risk Trading
Hello and welcome to the Pure FX market report for Monday 21st February 2011!
US
The US dollar lost against most major currencies on Friday as the outlook for most non-US currencies improved.
For instance the euro jumped on comments from ECB board member Lorenzo Smaghi that the ECB could increase interest rates to combat global inflation pressures. Sterling meanwhile improved on strong retail data that showed sales increased 1.9% in January compared to a -1.4% loss the month before.
There was no major data from the US to affect rates – but these releases were enough to bring the dollar down.
EU
In the EU Lorenzo Smaghi of the Executive Board of the ECB said on Friday that the bank might be forced to raise interest rates to combat global inflation. Prices for raw materials and foodstuffs are rocketing across the planet presently. This buoyed the euro on Friday because higher interest rates mean higher returns for investors.
This morning meanwhile there has been a spate of economic data from Germany. The German manufacturing PMI jumped to a record high of 62.6 in February according to new reports compared to 60.3 forecasts. The manufacturing PMI is an important indicator of the German economy so the news could really boost the euro.
In addition the German services PMI has also been released this morning. This came to a two month low of 59.5 against forecasts of 60.3
UK
In the UK meanwhile retail sales saw a major recovery on Friday after calamitous data in December. Sales for January jumped to 1.9% following a month in which they shrank -1.4%. The December decline came about owing to terrible weather rather than UK economic conditions. Nonetheless the markets were relieved at news of the recovery.
This morning meanwhile the latest house price index from Rightmove has shown the UK housing market is improving. The index jumped 3.1% in February compared to a 0.3% increase last month. This is a pretty minor economic release but could nonetheless boost sterling.
CA
The Bank of Canada released data showing that inflation was unchanged during January – remaining at 1.4% against forecasts of 1.5%. This proved negative for the Canadian dollar because low inflation decreases the odds of an interest rate hike, and high interest rates attract investment.
Coming Up
It’s a packed day for European data. Later on IFO is scheduled to release the German business climate and current assessment data. The EU services and manufacturing PMIs are also scheduled to be released.