Positive inflation outlook boosts GBP

Positive inflation outlook boosts GBP

Sinduja Venkat

Good morning and welcome to today’s foreign exchange market commentary on 16th of May. 

Here are MyCurrencyTransfer.com’s top 5 currency highlights:

  • GBP gains on positive inflation outlook
  • EUR swivels down further as Eurozone GDP fails to meet expectations
  • USD continues on bullish trend following disappointing Production data
  • Abe does it right as Japan reports optimistic 1Q GDP results
  • NZD defends itself backed by solid fundamentals at home

CURRENCY RATES OVERVIEW 

GBP/EURO – 1.1826
GBP/USD – 1.5207
GBP/CHF – 1.4729
GBP/CAD – 1.5498
GBP/AUD – 1.5507
GBP/ZAR – 14.1964
GBP/JPY – 155.8723
GBP/HKD – 11.8061
GBP/NZD – 1.8647
GBP/SEK – 10.1609

Mid-market rates as of 2013-05-16 08:53 UTC

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Key releases in the next 24 hours that may affect currency date:

Australia: No Data
Europe: EUR Euro-Zone Consumer Price Index (MoM) (APR), EUR Euro-Zone Consumer Price Index (YoY) (APR F), EUR Euro-Zone Consumer Price Index – Core (YoY) (APR F)
United Kingdom:  No Data
New Zealand: No Data
United States of America: USD Consumer Price Index (MoM) (APR), USD Consumer Price Index Ex Food & Energy (MoM) (APR), USD Consumer Price Index (YoY) (APR), USD Consumer Price Index Ex Food & Energy (YoY) (APR), USD Initial Jobless Claims (MAY 11), USD Housing Starts (MoM) (APR), USD Building Permits (MoM) (APR), USD Philadelphia Fed. (MAY)
China: No Data
Canada: No Data
Japan: JPY Machine Orders (YoY) (MAR)

 

GBP gains on positive inflation outlook

 

GBP made smallish gains at yesterday’s close and was trading 8 pips higher at 1.5224 against the USD. Yesterday’s session saw with Claim Count figure coming in at -7300 vs. -3000 forecast. The Bank of England also released its latest quarterly inflation report yesterday which is widely believed will influence the GBP/USD over the next few days. According to RBS analysts at the outlook for inflation is marginally better (less dire) than was the case in the previous Inflation Report in February, but the Bank still forecasts that economic recovery will continue to ‘remain weak by historical standards’ and for a protracted overshoot in inflation (until early 2015).”

 

EUR swivels down further as Eurozone GDP fails to meet expectations

 

EUR had a quiet trading session as the single currency dropped to new lows in over a month against USD, testing 1.2841. This was due to lower than expected GDP results coming in from France, Germany and the EU itself. In the middle of the session, disappointing US data help the pair appreciate however the greenback continues to be bullish sending the pair EUR/USD to its lowest ever levels.

 

USD continues on bullish trend following disappointing Production data

 

USD retraced gains yesterday against its peers, with US Dollar Index hovering over the 84.00 figure after a stream of lower than expected figures were released during yesterday’s session. US industrial production fell by 0.5% in April as compared to the 0.1% decline expected. The decline was driven by a decline in levels of manufacturing. Also below expectations, the US producer price index fell by 0.7% in April (0.6%yr).

 

Abe does it right as Japan reports optimistic 1Q GDP results

 

Prime Minister Abe’s policy decisions seem to be working for the Japanese economy at large as was evident in the stronger than expected Japanese GDP report for Q1 released last night. The report indicated that economic recovery in Japan strengthened in the first quarter of 2013 with real GDP growth of 3.5% compared to the modest 1.0% in the previous quarter.  This credit for this growth is given to external demand for Japanese products. Net exports contributed 0.4 % to Q1 GDP growth. USD/JPY pair was trading firmly in the 102.62 region during the last session.

 

NZD defends itself backed by solid fundamentals at home

 

NZD stayed put against the greenback finishing higher before the session close yesterday for the first time in over a week at 0.8200. The value of NZD/USD pair has recently been plundered thanks to the USD rally. However owing to the recent developments at home that have served to stimulate growth and point out to the sturdy interest rate changes that form a basis for the new Zealand economy, the currency seems to have developed resistance. The Q1 Labour Statistics Report released recently indicated that the New Zealand labour market is playing catch-up with its other key macroeconomic indicators- which presents a positive outlook for the investors.

 

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