The Euro has come back into play pushing the US Dollar into the sidelines as currency investors have once again become more risky. The tables have turned since Friday as confidence has grown following a spate of positive global data. US joblessness figures were better than expected and Chinese imports swelled in August matched by booming industrial production and retails sales.
Sterling was trading at the mid market rate of 1.5461 against the US Dollar and 1.2073 against the Euro at 9.30 am this morning.
Pound Sterling – UK Markets
Increased uncertainty about the UK economic outlook has caused the Pound to drop against the Euro which has begun to strengthen as markets have become less risk averse. The UK trade statistics for July were the latest set of figures to disappoint at the end of last week, with hopes for an export boom not materialising sufficiently to affect the overall trade deficit which has found its way to a five year high.
UK economic data this week kicks off with an insight into the strength of the housing market with the Royal Institution of Chartered Surveyors house price balance. Nationwide consumer confidence will also be released at the same time of 11 pm this evening.
US Dollar – US Markets
The US Dollar has dropped as interest in riskier currencies has re-emerged since Friday. Better than expected US jobs data, reports of growing industrial output in China and strong Japanese GDP figures have all raised the outlook for the recovering global economy and investors are expected to remain keen on riskier currencies for the start of this week.
The U.S Commerce Department report on retail sales tomorrow is also expected to show a slower rise for August than occurred in July.
The US monthly budget statement is due at 6pm GMT today which will indicate the level of Government debt.
Euro – European Markets
The Euro has gained against nearly all of its major counterparts. Apart from benefiting form increased risk appetite, confidence has been shored up by the new regulations from the Basel Committee on Banking Supervision. These have given banks the ample time of eight years to raise the additional funds needed to comply with higher capital requirements introduced to prevent another financial crisis.
There is an array of European data releases this week beginning with industrial production tomorrow expected to show a month on month increase which may help to continue to strengthen the Euro if the forecast is met.
Other Currencies – Highlights
The attention of markets has been focused on China with their booming industrial production and retails sales seen as an indicator of the global situation, adding to the momentum for risk appetite this week.
Industrial production grew 13.9 percent from a year earlier and consumer prices also jumped the most in twenty two months. Imports accelerated showing that Chinese growth is gaining speed after second quarter moderation which will encourage investors that the global economy may follow.
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