Building for the future

10 April, 2013

Paul Newfield

Yesterday morning saw British manufacturing and industry bounce back, after consecutive negative results, with more positive than expected data releases from February – a one percent rise from January. According to Bank of England policy maker Paul Fisher, evidence of this kind does not remove the need for quantitative easing which would further help the economy, together with the Funding for Lending Scheme which is improving borrowing conditions. Some sceptics, however, may point out that production improvement was aided by a higher than usual need for energy due to the exceptionally cold month that was experienced earlier this year. This pushed the pound up to within sight of a 1.5 month high against the USD. However, overall sentiment towards GBP remains under-par due to the first official estimate of how Britain’s economy has fared in the first quarter not being due until the 25th of April, with the dark clouds of possible triple dip recession still looming on the horizon. Inevitably the goods trade balance also negatively widened to £-9.416b from £-8.168b.

Our European neighbours also had some good news as the Euro climbed to the highest level versus the yen since 2010 as the Bank of Japan’s effort to double the nation’s monetary base within two years fuelled demand for higher-yielding assets. The much maligned Euro currency also gained for a fifth day against the USD due to Europe’s bailout fund said a bond sale drew strong demand – The 17-nation currency advanced as the European Financial Stability Facility sold 8 billion Euros ($11 billion) of five- year, 0.875 percent securities to what it said in an emailed statement was “exceptionally strong demand.” The offering drew 14 billion Euros in bids, according to the statement.

Today has already seen mixed industrial output results from a couple of the Euro zone nations which has seemed to have strengthened it against the Pound. Elsewhere sees major data releases this evening from the USA, namely the 10-year note auction, FOMC minutes and the monthly budget statement, but little from elsewhere. This data has potential to have an impact on the Euro as it normally does alla the See-saw effect – the Euro on one end and the Dollar opposing it.

Please do keep in touch with your account manager to ensure you are in prime position to score an Eagle rather than a bogie when transferring your money and stay ahead of the markets.