Currencies down on disappointing economic data

<p>Currencies fell after a series of weakening economic and commodities data</p>

Sterling

Sterling has ticked down slightly against the Euro since market open to 1.26 at 10.00 GMT, following marginally weaker UK GFK Consumer Confidence results for November. Nationwide House Prices also declined by 0.5 per cent to 8.5 per cent on the prior month, in line with market forecasts. 

This follows positive GDP data earlier this week, which showed the UK economy growing 0.7 per cent in the past quarter to September, or 3.0 per cent year-on-year.

Euro

The Euro fell back under 1.25 against the US Dollar, on the back of lower than expected German inflation numbers which saw the annual rate declining to 0.5 per cent, its lowest level in nearly five years. This increases the likelihood of further quantitative easing in 2015. 

Markets are awaiting the Eurozone CPI numbers to be released later today. ECB President Mario Draghi warned on Thursday that monetary policy alone would not solve the Eurozone problems, citing fiscal policy and structural reforms as essential. 

US Dollar

The greenback has rallied on the back of OPEC’s decision, trading at 1.57 against the pound, despite mixed economic data this week. 

On Wednesday, the greenback was down against the pound, with GBP/USD up 0.58 per cent at 1.579. This followed the release of weaker US data than expected with personal spending and personal income levels both rising just 0.2 per cent in October, below the 0.4 per cent forecast respectively. 

Liquidity is low with US markets closed yesterday for Thanksgiving. The market will be watching out for the results from Black Friday’s retail sales, traditionally a major boost to annual sales figures.

AU dollar

The Aussie dollar continued its slump overnight, largely as a result of the continued fall in oil and iron ore prices. At 17.32 AEDT, the Aussie was trading at 85.08 US cents, up from 84.40 US cents on Wednesday; its lowest level since July 2010. This follows another week of negative sentiment, with the Reserve Bank of Australia continuing to talk down the currency. 

The Japanese Yen traded lower in Friday’s Asian session following the release of weaker economic data. The yen fell 0.4 per cent to 118.15 against the US dollar at 14.32 JST, in line with the seven-year low of 118.98 reached last week. This comes on the back of weaker consumption data, which showed a continued decline in household spending and slowing inflation.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.