The dollar continued its recent run of good form yesterday pushing GBPUSD and EURUSD throughout the session. The renewed dollar strength is a simple byproduct of market uncertainty of how much quantitative easing the Fed will go for next Wednesday. Some analysts have suggested a straight injection of $500bn, while some are suggesting $100bn in monthly installments for 6 or so months; either way there is uncertainty.
We have also seen a fair bit of strong data from the US in the past few days with yesterday's releases carrying this on. Durable goods orders buoyed the markets as they grew by 3.3% although ex-transport they declined by 0.8%. New home sales were also good although any improvement from the shocking numbers we saw from the US housing market over the summer is a bonus.
Some news that has swooped back on to traders' radars is that of periphery Europe (the PIGS) and their budgetary issues. News from Portugal yesterday was that budget negotiations between the 2 main parties had fallen over due to disagreements over tax increases while Greek Prime Minister George Papandreou said reforms must carry on and that voters should vote responsibly in the upcoming local elections so the country can deal with its problems.
These problems combined with comments from the head of the Greek central bank that Greece is still a long way from economic reform and poor Belgian growth numbers caused the euro to weaken against the dollar and sterling for the second day in a row.
GBP has fallen this morning however after house prices from Nationwide showed that buyers are still staying away from the market. The average cost of a house fell by 0.7% with declines expected through the end of the year as austerity measures cause UK consumers to tighten their belts. GBPEUR is still in the 1.14s at the moment and a close above 1.15 should be enough to clear out this short-term downtrend we find ourselves in.
The data calendar is very quiet today with only US jobless claims at 1.30 to worry about. They are expected to show a slight increase from last week’s figure of 452k with a rise to 455k anticipated.
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Latest Exchange Rates At Time Of Writing |
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