United States Dollar: There was little in the way of data state side on Friday, so all eyes were on the UK retail sales figures. As many believed, with the UK weather being as bad as what it was in December, the retail figures came in much lower than predicted. A forecast figure of -0.2 % was met with an actual figure of -0.8 %. The ONS have marked this slump down to a fall in food and fuel sales, giving us the weakest December y/y sales growth since records began. Cable fell to 1.5870, from a session high of 1.5940, on the back of this data. The fall was also supported by UK mortgage approvals falling from 45,000 in November to 40,000 in December. A sterling recovery was seen however as the US session and weeks trading came to an end. A firmer 1.6000 was reached. This is partly down to MPC member Posen’s comments that he sees UK inflation falling “well below” the central banks 2 % target. UK inflation date last week showed that it had spiked to 3.7 %. Sterling sits a little lower this morning after the Asian session last night. Markets are possibly looking ahead to tomorrows UK GDP release. GBP/USD 1.5945 currently.
– We expect a range today in the GBP/USD rate of 1.5890 to 1.6020
Euro: Similarly to as mentioned above, data was quiet in the US Friday, so the German IFO data was the big release for the Euro. It didnt disappoint. German business confidence unexpectedly rose to a record high in January with an actual figure of 110.3. This figure came in 0.3 better than expected and showed an eight month consecutive increase. The positive figure also brought the IFOs chief economist Abberger out to conclude the release stating that German manufacturing is now completely out of crisis. Buy the rumour, sell the fact was seen after this release. The single currency broke its choppy start versus the Greenback on Fridays by gaining 90 pips on the back of this release, but it didnt last as it soon slumped back down after. Fitch, which had been on the minds of some Euro Zone countries, made some cautionary comments weighing on the Euro. Euro finished last week firmer however, reaching a high of 1.3626 after triggering a barrier option at 1.3600. The currency pair is not far off this figure this morning. GBP/EUR however continues to dip. No surprise really as investors bought a record EUR 8 billion last week and with Manufacturing and Services PMI data in the Euro Zone set to be positive, watch this space. GBP/EUR opens at 1.1745.
– We expect a range today in the GBP/EUR rate of 1.1690 to 1.1860
Aussie and Kiwi Dollars: Thursday last week saw both the antipodean currencies lose ground against the GBP and USD. Risk off trading was the reason for this as Chinese GDP figures sparked expectations that the authorities will stop the economy from boiling over. Friday saw these losses reversed though as risk appetite improved and supported the AUD and NZD. Australian PPI came in worse than expected overnight coming in at 0.1 %, lower than the predicted 0.5 %. This continued the roller coaster ride that the Aussie and Kiwi seemingly are taking against the GBP and USD of recent. GBP/AUD reached a high of 1.6200 on the back of this release and GBP/NZD 2.1150. Sterling lower across the board this morning however, with markets now possibly eyeing tomorrows UK GDP data. GBP/AUD begins this week at 1.6112 and GBP/NZD 2.1022.
– We expect a range today in the GBP/AUD rate of 1.6060 to 1.6220
– We expect a range today in the GBP/NZD rate of 2.0940 to 2.1110