UK retail sales decline and euro hits 22 month low

Published: 24 May, 2012

Sterling strengthened against the euro, however data released yesterday showed a sharp drop in retail sales figures to -2.3% when only a -0.8% figure was expected.

Sterling strengthened against the euro, however data released yesterday showed a sharp drop in retail sales figures to -2.3% when only a -0.8% figure was expected.

Currency rates - May 24

EURO/GBP - 1.2461

US$/GBP - 1.5682

CHF/GBP - 1.4972

CAN$/GBP - 1.6078

AUS$/GBP - 1.6062

ZAR/GBP - 13.151

JPY/GBP - 124.67

HKD/GBP - 12.175

NZD/GBP - 2.0843

SEK/GBP - 11.231

AED/GBP - 5.7614

US$/EURO - 1.2579

INR/GBP - 88.15

Sterling also strengthened against the commodity backed currencies; but, weakened against the US dollar and Japanese yen as risk aversion drove the market. The Bank of England's policy meeting minutes revealed that the MPC members voted 8-1 to keep quantitative easing unchanged despite the deterioration of the Eurozone. Revised GDP data released today could cause a lot of volatility if the figures differ significantly from the widely disputed preliminary figures that showed the UK was back in a technical recession.

The euro was extremely weak yesterday reaching a 22 month low against the US dollar as fears that Greece could soon leave the euro were reaching fever pitch as rumours started to circulate that EU policy makers have now started to put contingency plans in place. German bond yields (treaded as a safe haven) have also reached an all-time low reaffirming the markets fear for the so called "Grexit" (Greek exit). German and Euro wide manufacturing Purchasing Managers' Index (PMI) figures are released today; furthermore, German business climate data will go some way to show the state of the Eurozone economy; however, expect any news from Greece to have a much bigger impact on the market.

The US dollar performed well yesterday driven by investors seeking "safer havens" following the on-going developments in Europe. On the data front, new home sales figures released yesterday came in above markets expectations. Out today, the main news on the agenda is the weekly change in unemployment claims and figures showing the change in the total value of new purchase orders placed with manufacturers for durable goods. With the fears over the Eurozone continuing to dominate investor's minds, we will have to see how long this strong dollar trend continues.

Elsewhere; like the US dollar, the Japanese yen performed well today due to its safe haven status and following the Japanese central banks decision to not do anything at its monetary policy meeting. The annual budget for New Zealand was released first thing this morning; furthermore, Chinese PMI was also released.

http://www.youtube.com/watch?v=at1_TQv4EBI&feature=youtu.be

Printer friendly version