The US Dollar has been strengthening in response to its own internal data signalling economic growth, as well as in response to yesterday’s poor unemployment figures in the UK and spiralling uncertainty in Europe. Whereas UK retail sales have come in slightly worse than expected this morning, the Dollar’s surge yesterday was reflective of strong industrial and export figures. The industrial and manufacturing sectors have shown of late their ability to drive economic growth in various nations– today will reveal if US joblessness figures can help the Dollar continue its rally or cause it to stall.
Pound Sterling – UK Markets
The Pound dropped against the Euro throughout Wednesday afternoon but has since regained some of its losses. The fall against the Dollar on Wednesday was steep however as US data has continued to come in above forecasts.
Yesterday’s awful report on unemployment figures is largely responsible for the Pound’s demise. The Pound is also thought to owe some of its weakness to UK banks’ exposure to Spanish debt with Spain being put on watch for a downgrade.
Retail sales this morning have come in to show growth of 0.3 percent which is less than the 0.5 percent forecast. November’s growth is said to be driven by sales of toys, sporting goods, watches and jewellery.
US Dollar – US Markets
The US Dollar has gained on both the Pound and the Euro following more positive data with rising industrial output, growing exports and better consumer spending.
US Inflation data came in as expected up by 1.1 percent for the month of November.
Today’s weekly initial jobless claims are one of the next significant releases later today in a dense US data week.
Euro – European Markets
The Euro gained on Sterling on Wednesday afternoon as EU leaders met to discuss the threat of debt to the single currency. It has dropped back once more since then with economic and political issues of individual nations generating ongoing concern.
Spain and Belguim’s ratings issues are still in the minds of markets as well as the slim vote of confidence for the Italian Prime Minister as well generating civil unrest which is also still an issue in Greece.
Whether or not European nations can agree on the size of the mutual bailout fund is also an ongoing problem as differences come to the fore.
European CPI inflation data has come in at the expected low level of 0.1 percent for the month of November.
Other Currencies – Highlights
The Yen weakened against the US Dollar following poor business confidence figures.
The Bank of Japan survey showed that Japanese business confidence fell since March 2009 for the first time.
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