Yesterdays data releases followed a pattern, which, has been witnessed numerous times recently. Mixed data in the UK, surprises to the upside in Germany and, renewed worries about the Greek debt situation. This mix of data releases led to swings in the currency markets, which saw the Euro briefly strengthen against Sterling and the USD before retreating due to Sovereign default fears.
In the UK, there was mixed data with the CBI retail survey coming in above expectations, but, net public borrowing coming in significantly below expectations at the highest level ever for April. This figure will be a worry for the Government as it attempts to meet ambitious fiscal retrenchment plans.
Meanwhile, in Greece the head of the opposition party, said he would not support any new austerity plan, believing that increasing taxes would only serve to push the country deeper in to recession. Here, is the problem with the single currency, Greece, desperately needs to devalue its currency in order to export its way to recovery, and print money (forbidden by the Euro Zone) to cover its budget deficit, whilst, the European core needs to raise interest rates to keep inflation in check. In this respect it has still to be proven that a single economic currency can be made to work.
Today saw the breakdown of UK GDP which as expected remained unchanged at 0.5%.
It is a quiet day for Euro zone releases which may mean the single currency struggles to claw back losses. At the present time Sterling is struggling to stay above the 1.15 level against the Euro for the second time this month suggesting that this might be an area of resistance.
Posted in Daily Market News on May 30 2014
The Euro was hovering above a two month low against the USD this morning and dropped to its lowest ever level against the CHF. The weakening of the Euro against the safe havens of the USD and CHF indicates that a return of risk sentiment is currently gripping the markets,...VIEW FULL ARTICLE
Posted in Daily Market News on May 24 2011 by alex