An Inflated Week Comes To A Close

21 November, 2014

Simon Eastman

Sterling Stats Trump The EU

Yesterday we had another busy day for ecostats starting off with some EU PMI data covering manufacturing, composite and services all of which missed their forecasts and more importantly the figures are pushing down towards the key level of 50 which is the difference between expansion and contraction in the sectors. The result was the single currency off on the back foot.

Next up was UK retail sales and this was a brighter story for what has been a difficult week for the pound. Expectations exceeded significantly with the YoY figure posting 4.3 percent compared to 3.8 percent and 0.8 percent from 0.3 percent for the month. The CBI industrial trends survey out at 11am also posted a significant increase with analysts expecting a -6 figure, but actually posting a positive 3.

All in all a good start for those with sterling as we saw those buying euros gain a cent against the single currency making a purchase of €200,000 come lunchtime £1,300 cheaper than first thing in the morning!

United States of Inflation

After lunch focus turned towards our US cousins and a raft of inflation figures. These were keenly anticipated as, like here in the UK, they are considering raising interest rates and inflation levels come into this decision. A drop in inflation could lead the Fed to hold fire on rate hikes, just like the BoE have so the markets were keen to see results.

Unfortunately for sterling/dollar the figures came out and for US hawks didnt disappoint. The key CPI figure showed at 1.7 percent compared to forecast of 1.6 percent, while in other good news, those continuing to claim jobless allowance dropped to a greater degree than expected coming in at 2.33m over 2.37m.

As expected, with this giving credence to interest rates hiking in the future stateside the dollar pulled back some of its recent losses, making back over a half cent against the pound and similar against the euro.

Friday Stats Closing The Week

So we close the week with a quieter day compared to recent days but some key releases all the same. ECB president Mario Draghi is currently making a speech ahead of UK public sector net borrowing figures due out shortly. Later on, the US is all quiet leaving the stats to its over the border friends in Canada. Key inflation figures (naturally) so we’ll have to see if they can post decent figures to finish strong or whether the recent weakness these past couple of days will be the theme as markets close. Thos looking to send money to Canada could by prudent to lock in before the 1.30pm release to take advantage of the recent gains and not get caught in a correction.

As always the team at Currency Index are here to offer some friendly guidance throughout so give us a call today to discuss your requirements.