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 Construction remains robust - prints at 58.9 for September.
• Berlusconi gives Letta support - Italian coalition government intact.
• ECB holds 0.5% interest rate - Draghi comments interpreted as positive for Euro.
• GBP/USD carried higher by EUR/USD - US jobs disappoint.
Sterling British Construction output continued to expand in September, printing at 58.9, which is slightly below August's 6-year high but still well above the 50.0 mark that separates growth from contraction. The extent to which the UK Construction Industry has improved in 2013 is nicely illustrated by the fact that the house-building index of Markit's report registered the highest score for nearly a decade. The Housing index came in at 64.8, just below the level of 63.9 that was reached in November 2003.
Euro The single currency was handed a lifeline yesterday as Italy's modern-day Machiavellian media tycoon Silvio Berlusconi withdrew his attempt to bring down Prime Minister Enrico Letta's coalition government. Amid speculation of infighting within Berlusconi's People of Freedom (PdL) party, the slick-haired former PM decided to back Letta in a vote of confidence that should ensure political stability for the time being in Italy. The saga has seriously hampered Berlusconi's hopes of remaining in parliament, and his ejection from the Senate, due to a conviction for tax fraud, will begin on Friday. The Euro's fortunes also took a turn for the better yesterday as ECB President Mario Draghi struck a more positive tone than traders had anticipated following the European Central Bank's decision to maintain its current benchmark interest rate of 0.50%. Draghi commented that the currency bloc is more immune to crises, such as the one that threatened to take place in Italy this week, due to the Central Bank's pledge to support flailing Eurozone sovereigns on the bond market. The ECB President breathed life into the Euro when he said that policymakers were happy with the current rate of inflation, despite the fact that it is significantly lower than the 2.0% target, and reminded markets that the Euro exchange rate was not part of the ECB's remit. The Euro rallied by around half a cent yesterday in response to the positive developments in Italy and the shift in ECB sentiment away from additional monetary easing.
US Dollar Sterling is trading close to 9-month highs against the US Dollar as yesterday's Euro-positive events led to EUR/USD related cross-flow gains for the Pound. The downbeat Dollar was also impacted by a below par ADP Employment Change score of 166,000 for September, significantly lower than forecasts of 180,000. With UK Construction and Manufacturing both printing strongly in September and the US government still out of operation, traders sent Sterling higher by around 0.3 cents against the 'Greenback'.
Canadian Dollar Sterling investors were over the moon yesterday as the Pound reached a fresh 3.5-year high against the 'Loonie' for the fifth day in a row. The Canadian Dollar continued to haemorrhage support as the situation in the United States was seen to dampen the North American nation's economic prospects for the remainder of the year.
Australian Dollar The Pound rallied by around a cent against the Australian Dollar yesterday as traders reacted to some softer-than-expected Australian data. Building Approvals were reported to have decelerated from 28.8% in July to just 7.7% in August, missing predictions of 12.8%. The 'Aussie' was also hurt by a Trade Balance deficit reading of -A$815 million, which more than doubled forecasts of -A$400 million.
New Zealand Dollar The New Zealand Dollar declined by around -0.8 cents against Sterling yesterday as the growth-linked 'Kiwi' was damaged by risk-off trading conditions relating to the political impasse in America, which has led to the US government closing down indefinitely.
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