Markets remain mixed
Currencies Direct August 21st 2009 - 2 minute read
Markets remain mixed
Yesterday we saw a flurry of data from the UK economy. We firstly had retail sales which came in at 0.4% against the expectation of a 0.2% increase, UK M4 money supply came in stronger than expected at 1% and mortgage lending posted a 26% increase in July- well above forecast and yet sterling slipped. The damning data for sterling was centered on the public sector net borrowing number which rocketed to 8 billion against a forecast of 500 million. This got the politicians animated as borrowing continues to increase and growth forecasts are looking less likely to achieve. It is expected that on September 30 the UK will officially post a positive GDP number but again this will be a lot to do with stimulus related growth- sustainability will be the key.
Today more cheer from Germany and France as the PMI numbers for services and manufacturing came in stronger than expected and this is lifting the euro both against the USD to over 1.43 and the pound- pushing it to the low 1.15 levels. Later today expect volatility around 14:00 GMT as we have US existing home sales and Ben Bernanke discussing the economic crisis and recovery. GBP/USD is now back in its range from 1.62-1.66- it looks very vulnerable in the high 1.65’s and this level looks like a short term buy area as it quickly gets sold back on hitting these levels. EUR/USD is trading between 1.41-1.44 and China is heavily dictating the play here through buying on dips and selling on spikes to keep the range intact.
The big winner yesterday was the Norwegian Krone which hit a March high against the euro after data confirmed that Norway had officially exited the recession growing +0.3%.
report by Phil McHugh
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