Mixed news from the market
Germany’s private sector shrank for the fifth straight month in September but its services industry saw a modest upturn, indicating that the euro zone’s woes are having a relatively limited impact on its largest economy. Markit’s composite Purchasing Managers Index (PMI), measuring activity in both manufacturing and services, improved to 49.7 in September from 47.0 last month, a flash estimate showed on Thursday. Although it stayed slightly below the 50 mark that separates growth from contraction.
Meanwhile, the positive news from US housing market has given a small gain to dollar trading. Housing starts in August rose 2.3% on the previous month to an annual rate of 750,000. Despite a 1% drop in building permits, this compares well to the 612,000 housing starts recorded in 2011. Meanwhile, existing home sales increased by nearly 8% month-on-month in August to an annual rate of 4.82m, well above the consensus view of 4.56m and the quickest pace of sales so far this year.
The UK GBP retail sales fared 0.1 % better than forecasted at 3.1% and is a widely awaited figure, as the retail sales report is a direct measurement of consumer activities at the retail level. A higher release is generally good for the economy, and better for its currency.
On the FX market the euro seemed to be losing against the dollar after German PMI data showed a modest improvement in the services industry, easing some concerns about euro zone growth after poor French PMI data earlier. Sterling also seems to be losing against the dollar, currently trading at a range of 1.616-1.623, but has recovered some of its losses against the euro and is currently trading above 1.25.
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