Forex Focus
GBP/USD Performance Chart (10/03/10 12:00)
| Daily % Chg | -0.58% | 3 months | -8.41% | |
| 1 week | -1.26% | 6 months | -9.90% | |
| 1 month | -4.34% | 1 year | 8.23% |
Details
| Prev close | 1.4997 | 52 week high | 1.7043 | ||
| Last trade | 1.4910 | 52 week low | 1.3657 | ||
| High | 1.5017 | Low | 1.4873 |
Bloomberg Median Forecasts
| Q1 2010 | 1.60 | Q3 2010 | 1.56 | ||||
| Q2 2010 | 1.55 | Q4 2010 | 1.59 |
Commentary
Sterling fell for a third straight day against the US dollar following an unexpected drop in UK manufacturing production. According to the ONS, UK factory output declined 0.9% in January, confounding the analysts who were anticipating a 0.2% increase. In addition overall industrial production, which accounts for 17% of the UK economic output, fell 0.4% in January, missing expectations for a 0.3% gain. The drop in the production data may have been impacted by relatively bad weather conditions, so more data is needed before concluding that the UK economic recovery has lost steam. You can't blame investors for being sterling-averse, however: housing reports released over the past few weeks have indicated that house prices are starting to weaken again. Then there is of course political uncertainty, with a growing belief that the upcoming elections may result in a hung parliament, and concerns over the UK's widening budget deficit. Sterling was also affected by downbeat reports from credit rating agencies Moody's and Fitch this week. Meanwhile, BoE policy maker Adam Posen provided Sky News with a pretty upbeat speech yesterday, saying that 'growth will pick up from here', and that all three major political parties will introduce some kind of austerity budget to bring down the country's deficit. Anthony Grech, London
EUR/USD Performance Chart (10/03/10 12:00)
| Daily % Chg | -0.06% | |
3 months | -7.72% |
| 1 week | -0.75% | 6 months | -6.62% | |
| 1 month | -0.40% | 1 year | 7.79% |
Details
| Prev close | 1.3602 | 52 week high | 1.5144 | ||
| Last trade | 1.3594 | 52 week low | 1.2556 | ||
| High | 1.3613 | Low | 1.3545 |
Bloomberg Median Forecasts
| Q1 2010 | 1.39 | Q3 2010 | 1.39 | ||||
| Q2 2010 | 1.38 | Q4 2010 | 1.38 |
Commentary
The euro was relinquishing early gains against the US dollar by late morning following a disappointing trade report from Germany, Europe's largest economy. According to the Federal Statistics Office, Germany's seasonally-adjusted exports unexpectedly slumped 6.3% in January, wiping out December's gain and ending a four-month streak of gains. 'Today's data does not fit at all with the other industrial data we've been getting out of Germany, so the decline must be driven by one-off factors and a backlash from December,' said Stefan Bielmeier of Deutsche Bank. 'It doesn't change the overall trend that exports are going to be the growth driver.' [1] Bundesbank President Axel Weber yesterday said the coldest winter in 14 years may cause the Germany economy to contract this quarter. However, he also said that robust factory orders and industrial production indicate that recovery is 'essentially' intact. The Bundesbank expects the German economy to expand 1.6% this year following a 5% contraction in 2009. Anthony Grech, London
AUD/USD Performance Chart (10/03/10 12:00)
| Daily % Chg | 0.24% | |
3 months | -0.03% |
| 1 week | 1.15% | 6 months | 6.25% | |
| 1 month | 5.97% | 1 year | 45.03% |
Details
| Prev close | 0.9141 | 52 week high | 0.9406 | ||
| Last trade | 0.9163 | 52 week low | 0.6307 | ||
| High | 0.9168 | Low | 0.9132 |
Bloomberg Median Forecasts
| Q1 2010 | 0.9 | Q3 2010 | 0.91 | ||||
| Q2 2010 | 0.9 | Q4 2010 | 0.91 |
Commentary
The Aussie dollar rose against the US dollar this morning following an exceptionally robust trade report from China, Australia's biggest trading partner. 'They (Australian and New Zealand dollars) are benefitting from good Chinese data which suggest that the economy there is expanding strongly. Due to the close trade ties, this should also result in corresponding momentum for the economies of Australia and New Zealand,' Commerzbank analysts said in a note today. [2] According to an official trade report, China's exports surged by 46% in February from a year earlier, ahead of expectations. Although the rebound in exports is a positive for the Chinese economy, it also bolsters inflationary pressures, meaning China has room to tighten monetary policy. This move would be interpreted as a bearish sign for commodity demand and perhaps have an impact on the Aussie down the line. Meanwhile, today’s trade report showed copper imports by China increasing 10% in February, implying that demand for the commodity has remained strong so far. Anthony Grech, London
Notes: [1] Bloomberg News (10 March 2010), [2] Reuters News (10 March 2010). Chart data sourced from Bloomberg. Bloomberg Median Forecasts are produced by Bloomberg by taking the median level from rates forecast by a number of contributors. These contributors consist of leading banks and security firms.
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