Dear Subscriber, Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements. Headlines • UK Retail Sales down in August - Sterling slides.
• GBP/EUR down -0.8 cents - Ireland exits recession.
• GBP/USD down -0.6 cents - US data mildly positive.
• NZD & CAD gain vs. GBP - risk sentiment up on Fed taper decision.
Sterling The Pound tumbled against almost all of its major currency peers yesterday as the burgeoning UK economic revival showed its first signs of slowing. British Retail Sales fell by -0.9% during August, reflecting a reversal in demand for picnics and BBQs as July's heat wave came to an end. Food spending decreased by -2.7% in August and was the main driver behind the weaker-than-anticipated figure, however, Retail Sales were still 2.1% stronger than a year ago when all eyes were on the telly as British athletes performed admirably in the Olympic and Paralympic Games. Due to the fact that consumption accounts for over 60% of UK GDP, it is unsurprising that Sterling tanked upon the soft release.
Euro The Euro strengthened by around 0.8 cents against the Pound yesterday as investors pared back their estimations of British third quarter growth in response to the underwhelming Retail Sales reading. Across the Irish Sea, it was reported that Ireland has emerged from recession after a nine-month long contractionary period. Traders welcomed the 0.4% second quarter expansion, however, they did not celebrate it because it was only half the 0.8% rise that had been expected. The single currency also remained supported as risk sentiment continued to swell in the aftermath of the Fed's decision to hold off on monetary tightening.
US Dollar Sterling shrunk by around -0.6 cents against the US Dollar yesterday as decelerating Retail Sales growth impacted demand for the UK currency. In the States traders were left bemused with another incomplete US Jobless Claims report, which did not feature data from California or Nevada for a second week running due to glitches with newly installed IT systems. The Jobless Claims figure came in at 309,000, which is higher than last week's 294,000, suggesting that the labour market deteriorated slightly in the last 7 days.
Other US data printed surprisingly well: the Philadelphia Fed Index more than doubled forecasts of 10.0, coming in at 22.3, the Existing Home Sales figure smashed expectations of a -2.6% fall, printing at +1.7%, and the Leading Indicators reading came in one percentage point higher-than-anticipated at 0.7%. The encouraging trio was largely overshadowed by the Fed's commitment to continue monetary stimulus and GBP/USD did not falter further upon the releases.
Canadian Dollar The Pound retracted from levels not seen for over 45 months against the Canadian Dollar yesterday as UK Retail Sales failed to impress. Sterling could fight its way back this afternoon if investors react acerbically to the latest Canadian Consumer Price Index result, which is expected to have slowed from 1.3% to 1.1% in August, making a Bank of Canada rate hike even less likely in the near term.
Australian Dollar When is good news, not good news? The Australian Dollar failed to hold onto its soft-UK-Retail-Sales-related-gains yesterday, as a paradoxical scenario played out inside the minds of financial traders. With the Fed opting not to taper its asset purchasing programme, risk sentiment surged and the 'Aussie' Dollar strengthened, which subsequently led to increased calls from Australian business owners for the Reserve Bank of Australia to unleash another interest rate cut to help make the nation's exports more affordable to foreign buyers. This damaged demand for the Antipodean currency.
New Zealand Dollar The Pound continued to track lower against the New Zealand Dollar yesterday as British Retail Sales disappointed investors' expectations. The 'Kiwi' was also helped by the slightly stronger-than-anticipated annualised Q2 GDP score of 2.5%. If you need any further assistance, or require a live dealing quote - please do not hesitate to contact me on 01736 335250 or send an email to info@torfx.com Regards,
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