GBP data looks positive and EUR falls again
The USD has made some significant gains against several currencies as Obama’s fellow Democrats questioned his plan to extend tax cuts to all Americans. The concerns caused investors to dump US treasury bonds on fears that low taxes will further worsen the hole in the US deficit and inflation could be a problem further down the line.
The euro was again hampered by worries over the budget deficit and has all but lost the recent gains it had made against the USD and Sterling. Yesterday we had the data out for German factory orders which came in at 14.2%, much worse than the expected 18.6% and will put a dampener on the view that Germany will drag the rest of Europe out of recession. This morning we have the German Industrial Production figures, expected to show a move into recovery but after yesterday weak data this may not come in as high as expected and could further hurt the Euro.
Sterling on the other hand has been having quite a positive week and was lifted by the UK manufacturing data released yesterday coming in ahead of expectations. Today we have the CBI Industrial Trends Survey out for the UK which could also show a more positive sentiment in the manufacturing industry, if it does it will give credence to the idea that the UK manufacturing sector may play a significant part in the recovery.
A busy week of data continues and we will no doubt have a few more surprises later in the week although Sterling currently looks quite well placed and, short of some poor data or news coming out, could have a decent week.