US Government stand off damaging good run for the US Dollar

3 October, 2013

Ashley Finill

The bullish Pound is still on the rise this week with negative data coming out from the Euro zone and US. Yesterday saw further negativity from the Euro zone with unemployment rising in Spain by an additional 25,000 people compared to last month. The ECB has kept the benchmark interest rate on hold at 0.5% as expected, recent economic data coming out from the Euro zone seemed to show a more speedy recovery on the horizon but for now sees a slight bump in the road. Later on Mario Draghi’s speech on the monetary policy showed some positivity for the Euro zone, the Italian stocks recovered due to a vote of confidence in favor of the Italian prime minister Letta which gave the Euro some strength gaining half a cent on the Pound and a cent against the US Dollar. Today Markit Services PMI data is released in the Euro zone and in the UK. The consensus is positive for the Euro zone and could give some much needed strength for the euro. In the UK consensus is the opposite previous reading was 60.5 and tomorrow it is expected to be at 60.0. Expect to see volatility in the market when these figures are released at around 9.30am. At around 10.00am retails sales data is also out in the Euro zone, this could also be seen as negative for the euro as last month’s reading stood at -1.3% and the consensus stands at -1.5% so it could be an active day for the change in rates in today’s currency market. Onto Data Releases from the US, Initial jobless claims is to be released which is looking to weaken the dollar further but as we know that is not a given and is only an assumption. Later on Factory orders are released which is looking positive from the previous month from -2.4% to 0.3%. keep an eye on the markets today for a what could be a fairly volatile day for the rates. Friday sees the key US data release of non-farm payrolls, which can bring wide volatility depending on how far from expectation the result is. This comes out along with average earnings and the unemployment rate, so could that be the turn-around this week for the weakened dollar? Stay in touch with your Currency Index broker for more friendly advice and guidance for all your currency needs.