Lots of data to digest today
Currencies Direct November 24th 2009 - 2 minute read
Today is a data packed calendar for the markets. Notably we kicked off with the German November IFO survey which came in stronger than expected; this has lifted the euro a little this morning after a bad start. Concerns have been rising again on the health of West LB in various articles which to some extent undermined the euro in early trading. The euro still remains locked on the target of 1.50 against the USD and we need to see a break of 1.5050 to forge a move higher. Overnight we have seen a swing back into USD buying as concerns over the state of the global banking system re-emerge. The S&P have again warned that nearly all of the major global banks lack sufficient capital to cover trading and investment exposure…Japanese stocks weakened as concerns grew that Japanese banks are set to sell more shares to replenish capital.
Yesterday from the US we had existing home sales data come in well above expectations- rising by the most since Feb 2007 and pre-crunch. The demand may have been driven by tax incentives which are set to be extended from November to April next year. Today from the US we have more housing data and the revised third quarter GDP, we also have consumer confidence and the minutes from the FOMC meeting. Should be a volatile day for the USD and the main points to look at are the tone of the Fed and also the revision of GDP which is expected to be downwards following recent retail data. We still remain in a negative USD trend despite the intermittent pull backs and it is still difficult to see a change in this momentum unless the Fed turns hawkish.
Sterling is looking a little nervous this morning rattled by banking fears. We are nearing 1.10 against the euro and testing 1.65 against the USD and trading at 146.50 against the JPY…comments from the Bank of England today have offered no huge surprises but has highlighted that a credible plan is needed to reduce the UK deficit. Mervyn King also explained that there was genune uncertainty on the impact of QE- not very encouraging! The main focus for sterling is tomorrows revised GDP data and a solid upward revision is need to avoid a dip into lower trading levels against the major currencies.