Market Overview – 18th May 2009 to 22nd May 2009

For the latest news releases affecting exchange rates, please see our currency blog which is updated daily at http://currencyindex.blogspot.com.

The Pound is enjoying relatively good levels against both the Euro and US Dollar – but is struggling elsewhere against the Australian Dollar and South African Rand.

This week sees a number of important data releases. In the UK, Tuesdays RPI and CPI inflation data will be important, as will Wednesday’s publication of the Bank of England’s minutes of the most recent interest rate meeting. We therefore expect volatility for the Pound.

For anyone sending money to Australia in the coming weeks and months, seeing rates recently below £1 = $2 is a concern. In the early hours of Tuesday the RBA release the minutes of their last interest rate meeting, where rates were kept on hold at 3%.

Elsewhere, Canadian inflation data is out on Wednesday at midday UK time. Transferring money to Canada will be affected if the figures are wildly different to expectations.

Finally on Thursday UK Retail Sales are released at 9.30am, and any clues as to the health (or otherwise) of the UK high street economy could change the outlook for the Pound again. Friday is quiet before the long weekend – but exchange rates can still move when markets are open outside the UK.

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RBA Meeting's Minutes - Top
The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. If the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

Consumer Price Index - Top
The Consumer Price Index released by the National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).

Retail Price Index - Top
Retail Price Index released by the National Statistics is a statistical measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It is widely considered as a key measure of inflation that indicates an accurate reflection of the cost of living. A high reading is seen as positive (or bullish) for the GBP, whereas a low reading is seen as negative (or bearish).

Housing Starts - Top
The Housing Starts released by the US Census Bureau is an indicator that tracks how many new single-family homes or buildings were constructed. For the survey each house and each single apartment are counted as one housing start. The figures include all private and publicly owned units. It indicates movements of the US housing market. A high reading anticipates positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).

Bank of England Minutes - Top
The minutes of the BoE MPC meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. If the BoE is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the GBP.

BoC Consumer Price Index - Top
The Consumer Price Index Core is released by the Bank of Canada. “Core” CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. These volatile core 8 are considered as the key indicator for inflation in Canada. A high reading anticipates a hawkish attitude by the BoC, and that is said to be positive (or bullish) for the CAD.

Consumer Price Index - Top
The Consumer Price Index released by the Statistics Canada is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of CAD is dragged down by inflation. The Bank of Canada aims at an inflation range (1%-3%). A high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the CAD.

EIA Crude Oil Stocks Change - Top
EIA Crude Oil Stock is a measure of change in crude oil storage and it's released by the Energy Information Administration. This report indicates the oil demand and the price volatility. As the oil prices have an impact on worldwide economy, some volatility for the currencies, specially for the CAD is expected. We have to take into account that Canada is the world's fourteenth largest producer of oil so a strong oil demand appreciates, or is bullish for the CAD.

FOMC Minutes - Top
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

Retail Sales - Top
The retail Sales released by the National Statistics measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. A high reading is seen as positive, or bullish for the GBP, while a low reading is seen as negative or bearish.

Philadelphia Fed Manufacturing Survey - Top
The Philadelphia Fed Survey is a spread index of manufacturing conditions (movements of manufacturing) within the Federal Reserve Bank of Philadelphia. This survey, served as an indicator of manufacturing sector trends, is interrelated with the ISM manufacturing Index (Institute for Supply Management) and the index of industrial production. It is also used as a forecast of The ISM Index. An above-the-expectaitons reading is seen as positive.

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