Sterling plummets after poor UK retail sales

Sterling dropped sharply against the dollar after poor U.K. retail sales data. GBPUSD dropped to a London session low of 1.5769 from 1.5891 within 30 minutes of the data that was released at 09:30 GMT.

Retail sales in the U.K. declined in February by 0.8 percent as reported by the U.K. Office for National Statistics on Thursday. This was lower th
an the forecast for a 0.4 percent monthly fall. What was worse was that the January number was revised down to 0.3 percent from 0.9 percent in the initial estimate.

The poor sales data might provide the first indication that U.K. household spending was squeezed to the limit and British consumers are now cutting back even more on their spending. Spending power has been hit by high inflation and wage growth that has failed to keep track as well as fuel prices that have dampened discretionary purchasing power.

The weak data raises concern that the Bank of England could start thinking again about further quantitative easing, which is a measure than has a weakening effect o the pound.

Euro falls below $1.32

USDJPY slid down to 83.28 in the U.S. trading session from an earlier high of 84.08. The dollar decline accelerated after lower than expected U.S. existing home sales.

Elsewhere, the dollar gained against the euro, Canadian and Australian dollar. The ICE U.S. dollar index which tracks the greenback against six major currencies, rose to 79.654 compared with 79.616 on Tuesday.

EURUSD fell to a low of 1.3177 during the U.S. session as risk aversion returned and markets were cautious as the focus is beginning to shift to Spain and away from Greece. Earlier, the euro had climbed to an almost two-week high of $1.3283 after the Greek parliament had approved the second bailout deal.

The widening in the gap between Spanish bond yields and those of safe-haven German Bunds sparked concerns over the euro zone debt crisis. EURJPY fell to 110.03 from 111.42.

USDCAD rose to 0.9934 after bouncing from an earlier low of 0.9873. AUDUSD extended losses to a session low of 1.0420 compared to an earlier high of 1.0523.

Sterling fell sharply against the dollar after the release of the Bank of England minutes from the last policy meeting on March 8. The minutes were more dovish than expected and showed two MPC members wantedfurther stimulus measures and to expand the bank’s asset purchase program by 25 billion pounds. Also disclosure of February’s much higher-than-expected UK public sector borrowing figures weighed on the pound.

Meanwhile, British Finance Minister George Osborne unveiled his 2012 budget today , with deficit cutting measures. GBPUSD fell further to a low of 1.5816 in the U.S. session from an earlier high of 1.5922.

The dollar dropped sharply against the yen after a disappointing U.S. home sales report.

Existing home sales unexpectedly fell in February and the supply of properties on the market rose, underscoring the many hurdles for a housing market recovery.

The National Association of Realtors (NAR) said existing home sales slipped 0.9 percent to an annual rate of 4.59 million units last month. Economists polled by Reuters had expected sales to rise to a 4.62 million-unit sales pace last month.

USDJPY dropped to 83.72 within 20 minutes of the data, from a pre-data level of 83.96.

EURUSD initially fell from 1.3225 after the data to 1.3211 then jumped to 1.3255.

However, January’s sales pace was revised up to 4.63 million units from the previously reported 4.57 million units.

About 33 percent of pending contracts were cancelled, the NAR said. Investors bought 23 percent of homes in last month, with first-time buyers accounting for about third of the transactions.

UK finance minister Osborne unveils 2012 budget

The United Kingdom Annual 2012 budget plan was unveiled by British Chancellor of the Exchequer George Osborne . The finance minister suggested that the British economy looked set to avoid a renewed recession and the recovery will pick up speed next year.

The following statements are reactions to the government’s economic forecasts, business measures and new tax proposals:

ROSS WALKER, RBS

“All very much as expected, barely any changes at all to the growth and borrowing numbers.

“All very much as expected on the macro side (..) and thus far the micro policy changes are all very much as had been leaked. It looks from a market point of view to be fairly neutral.”



GEORGE BUCKLEY, DEUTSCHE BANK

“The numbers are not vastly different to what was expected and certainly not vastly different to what was announced just a few months ago.

“Growth was revised up slightly for 2012 to 0.8 percent (from 0.7 percent) – while this is the first upward revision we have seen in quite some time (since 2009) it is clearly very modest.”



BRIAN HILLIARD, SOCIETE GENERALE

“The headline grabber is the cut in income tax. He said the higher rate didn’t raise any extra money anyway, so economically he can justify it but politically I think it’s a bit of a gamble.

“I’m a little bit surprised to see them lower the claimant count forecast, so they are a little bit more optimistic about employment and unemployment, which needs to be looked at.



PHILIP SHAW, INVESTEC

“Nothing particularly dramatic. The GDP forecasts look reasonably similar to the autumn statement numbers, it’s not a massive shift in the economy between November and March.”

Euro slides; pound declines after BOE minutes

The euro’s advance against the dollar was soon capped in early European trading hours. EURUSD peaked at 1.3283 before easing down to 1.3211. EURJPY opened the session at 110.94 and extended gains to 111.42 before easing. The main driver behind the rise in the euro earlier today was the Greek parliament’s approval of the second bailout deal.

Sterling fell sharply against the dollar and euro after the release of the Bank of England minutes from the last policy meeting on March 8. The minutes were more dovish than expected and showed two MPC members wanted to expand the bank’s asset purchase program by 25 billion pounds.

Meanwhile, disclosure of February’s much higher-than-expected UK public sector borrowing figures also weighed on the pound. British Finance Minister George Osborne unveiled his 2012 budget today , suggesting that the British economy looked set to avoid a renewed recession and the recovery will pick up speed next year. GBPUSD fell to a session low of 1.5821 from an earlier high of 1.5922. EURGBP rose to an eight-day high of 0.8369 after the BOE minutes but soon slid back down to 0.8339 on a broadly declining euro .

The dollar rose against the yen and Swiss franc ahead of key U.S. economic data that is expected to show sales of previously owned U.S. homes probably rose in February to an almost two-year high, adding to signs of stabilization in the real-estate market. If the data come in strong, this will be dollar-positive.

USDJPY broke out of the 83.52/76 range it was trading in the last two session and rose to 84.08 in the European session.

Dollar also bounced against the Swiss franc, with USDCHF rising to a session high of 0.9125 from 0.9076.

The Australian dollar’s attempt to gain ground against the greenback ran out of steam. AUDUSD was capped at a European session high of 1.0523 before the broadly strengthening USD pressured the pair down to 1.0443.

Sterling drops after dovish BOE minutes; GBPJPY hits 9-mth high

Sterling fell sharply against the dollar and euro after the release of the Bank of England minutes from the last policy meeting on March 8. The pound hit a nine-month high against the yen.

The central bank’s Monetary Policy Committee voted 7-2 to keep its asset purchase program unchanged at 325 billion pounds. The two members that voted against and wanted to expand stimulus were Adam Posen and David Miles. They wanted to see an increase to the asset purchase program by 25 billion pounds.

The BOE minutes were more dovish than expected and showed policy makers saw a “clear risk” surrounding the outlook for crude oil prices.

“If oil prices were to rise to a level significantly higher than the committee currently assumed, then that would tend to slow the global and domestic recovery, reduce su

pply growth, and put upward pressure on domestic costs and prices,” the minutes said.

Spencer Dale, Chief Economist for the BOE said on Tuesday that U.K. inflation may not slow as much this year as forecast due to tensions in the Middle East pushing oil prices higher.

Further weighing on the pound was a report from the U.K. Office for National Statistics that showed higher-than-expected UK government borrowing. Public Sector Net Borrowing rose to 12.9 billion pounds from the 5.2 billion expected.

Following the data BOE minutes at 09:30 GMT, GBPUSD dropped to 1.5842 from a pre-data level of 1.5898. EURGBP rose to a session high of 0.8369 from 0.8342. GBPJPY hit a nine-month high of 133.35.

The focus now turns to the U.K. budget plan to be released at 12:30 GMT by Chancellor of the Exchequer George Osborne.

Greek parliaments ratifies second bailout deal

The euro advanced higher against the yen during European trading hours, to extend gains from the prior Asian session, hitting a fresh near 5-month high.

EURJPY reached 111.24 as the single currency got a lift against an ailing Japanese currency that has been weakened in the wake of monetary easing by the Bank of Japan last month. EURUSD climbed highe

r to 1.3283

Meanwhile, euro got an extra lift today after news late on Tuesday/early Wednesday morning that the Greek parliament ratified the second bailout deal, which will see the debt-ridden nation receive an additional 172 billion euros of aid from the EU and IMF.

The results of the bailout approval vote were 213 lawmakers supporting the loan deal, and with 79 deputies voting against it. Eight abstained from voting.

Approval of the bailout deal will set the stage for a round of harsh measures that international lenders have set as a precondition for the funds. The agreement was signed off in early March by Greece’s euro-zone partners, which ended months of negotiations and caused concerns in the markets over fear of the Greek debt crisis spreading to the rest of the euro zone. This put extreme pressure on the euro, which fell to levels as low as $1.26.

Euro bounces to 5-month high against yen

The euro advanced against the dollar and reached a five-month high versus the yen after news that the Greek parliament ratified the new EU/IMF bailout deal, which helped improve risk appetite in the markets. Also, the Greek finance ministry said on Tuesday Greece received its first tranche of 7.5 billion euros of aid under its second international bailout agreement. EURUSD bounced during Asian trading to as high as 1.3282 from 1.3223.

GBPUSD edged up with risk appetite from 1.5855 to 1.5893, though investors were cautious ahead of the key U.K. annual budget plan to be released by Chancellor of the Exchequer George Osborne later today. EURGBP opened in Asia at 0.8337 and rose to 0.8358, where it found strong resistance.

EURJPY advanced further to make a new five-month high of 111.14, after rising steadily from 110.70, as euro was lifted across the board following the good news from Greece. USDJPY was capped below 83.73, as risk appetite kept the dollar subdued. Disappointing economic data from Japan showed Japanese all industry activity declined more than expected in January due to a contraction in the tertiary sector, which pressured yen.

The Australian dollar was given a boost thanks to upbeat sentiment. AUDUSD pared losses and bounced from Tuesday low of 1.0456 to rise to 1.0525. The aussie suffered steep losses yesterday on fears about a hard economic landing in China and slowing growth.

A broadly weak dollar pushed USDCHF down to 0.9079 from 0.9115. USDCAD fell to 0.9882 from 0.9914.

Euro back above $1.32; aussie extends decline

The euro bounced back against the dollar in the U.S. session to make up for earlier losses and basically moved back closer to levels reached after its bounce on Monday. EURUSD bounced off a low of 1.3171 to rise above 1.3214.

The dollar’s earlier advance ran out of steam by the North American trading session. The greenback shrugged off U.S. economic data, on weak housing starts, and also showed little reaction to a talk that Federal Reserve Chairman Ben Bernanke gave today.

GBPUSD mostly traded sideways in the last two sessions, supported above 1.5829. Sterling remained supported from a further decline after CPI data earlier today showed UK inflation eased less than expected in February, lowering the chances of further monetary easing in coming months. The focus turns to Wednesday’s budget plan to be released by UK Chancellor of the Exchequer George Osborne.

The Australian dollar weakened sharply against the dollar, as higher-yielding currencies weakened across the board amid risk aversion due to concerns over slowing growth in China. Earlier today, the world’s largest mining company, BHP Billiton commented that steel production is slowing, and iron ore demand is slowing. China is a major export destination for Australia and so is sensitive to the health of the Chinese economy. AUDUSD slid to a low of 1.0456, which was 180 pips lower than the Monday high.

The Canadian dollar fell as much as 1 percent against its U.S. counterpart due to declining oil prices. Crude is Canada’s largest export. Crude prices fell as much as 2.5 percent to US$105.06 a barrel, compared to Monday’s high of $108.22 . USDCAD spiked as high as 0.9967 in early North American trading hours, bouncing off low of 0.9859.

USDJPY was little changed over the day, remaining close to an eleven-month high. After a dip to 83.31, the pair bounced back close to previous levels, reaching 83.76. EURJPY hovered close to a five-month high, trading up to 110.75 .

Dollar rebounds on softer risk appetite

The euro slid during European trading hours, being pressured down by a stronger dollar today. EURUSD opened in Europe at 1.3231 and fell to 1.3171. The greenback gained across the board due to damp risk appetite amid worries over China’s growth outlook.

The ICE dollar index which measures the dollar performance against six major global currencies, climbed to 79.673 from 79.451 late Monday.

GBPUSD opened in London at 1.5867 following a slide from the Asian session, Sterling extended the decline but briefly gained after softer U.K. inflation data which showed a decline in CPI (consumer price index). The gain was not sustainable against a stronger dollar and GBPUSD slid down to 1.5829.

EURGBP dropped sharply after the U.K. CPI data, falling to a session low of 0.8314 from a high of 0.8343. GBPAUD hit ten-week high of 1.5128, rising from 1.5004.

EURJPY rose to a five-month high of 110.81, tracking the rise in USDJPY. This was the highest level since the Bank of Japan currency market intervention to weaken the yen on October 31. The pair soon gave up all gains and fell back down to 110.28. USDJPY was on the upside, rising to 83.82 from 83.43.

The Swiss franc has overlooked strong Swiss data, which showed industrial orders rose. The broadly stronger dollar pushed USDCHF back up to 0.9152, to recover from a steep fall on Monday to 0.9110. The Swiss currency outpaced the euro, pressuring EURCHF down to 1.2053.

USDCAD bounced as the greenback pushed its recovery envelope from yesterday’s 17-day low of 0.9859 to a high of 0.9935 as the commodity price-sensitive loonie suffers on the back of damp risk appetite. Falling crude oil, which is Canada’s major export, did not help. Oil prices tumbled to US$106.81, versus Monday’s high of US$108.22.

The growth-sensitive Australian dollar was hurt by concerns of slower growth in China, its major export partner. AUDUSD dipped to 1.0475, falling from the Asian session high of 1.0623 after comments from the world’s largest mining company, BHP Billiton, which said China’s iron ore demand is flattening.

Sterling gains after UK inflation data

GBPUSD rose after U.K. inflation data reported better than expected numbers and fell. This raised speculation that the Bank of England would be less likely to implement more quantitative easing this year, which usually weakens the British currency. GBPUSD rose to 1.5864 after the data at 09:30 GMT from the 1.5849 pre-data levels. EURGBP fell to a session low of 0.8314 within 30 minutes of the data, versus a session high of 0.8343. Sterling also gained against the Swiss franc and Japanese yen. U.K. inflation edged down in February to the lowest level in over a year. The Office for National Statistics reported that annual consumer price inflation eased to 3.4 percent in February, slowing from a 3.6 percent annual rate in January. On a monthly basis, consumer inflation rose 0.6 percent from January. Expectations were for a monthly inflation of 0.5 percent and a year-on-year rate of 3.3 percent. It is hoped that the decrease in inflation will allow British consumers to increase spending this year and boost the economy.

Dollar remains subdued; euro consolidates gains

Markets in Asia had light volumes due to a public holiday in Japan. USDJPY traded an extremely tight range between 83.33 – 83.48. EURJPY consolidated gains made yesterday when it rose over 100 pips to 110.54 as euro got a lift after another hurdle in the Greek debt crisis was cleared and a Greek credit default swap auction was completed successfully. EURUSD traded sideways, slipping slightly from a one-month high on profit taking after the pair surged on Monday to 1.3264. The Greek default insurance (CDS) was paid out in line with expectations. This means the owners of Greek CDS would be paid 78.5 cents on the euro, enough to compensate for the roughly 75 percent loss investors incurred on the Greek debt restructuring. The focus will turn to German PPI data due later today, which could move euro depending on the results. The Australian dollar slid 0.4 percent against the U.S. dollar after coming under pressure from comments by global miner BHP Billiton which said it saw signs that growth in iron ore demand was flattening in China, which is Australia’s single biggest export market. The commodity-linked aussie dollar slid down to a low of $1.0550. GBPUSD declined on profit-taking to 1.5863 from a big spike yesterday to 1.5912. Meanwhile, EURGBP opened in Asia at 0.8329 after a sharp 60 pip gain on Monday. The pair consolidated briefly then extended its advance in Asia to a high of 0.8338. USDCHF traded a tight range after a plummeting to 0.9090 on Monday. Dollar is weak across the board following Friday’s softer U.S. inflation data which fueled speculation that Federal Reserve will unlikely tighten monetary policy, and increases the scope of maintaining the current low interest rates. This reduces dollar demand. Market will focus on Fed Chairman Ben Bernanke’s talks to get a clearer direction for the dollar and the U.S. economy. Bernanke gives the first of four lectures at George Washington University today and testifies before a U.S. House committee about Europe’s debt crisis on March 21.

EURGBP falls to one-month low

EURUSD dipped slightly in the European trading session, unable to advance further from the highs of 1.3185 reached on Friday, when the euro surged after soft U.S. inflation data weakened the greenback. Lack of any significant economic data meant there was nothing to drive the pair higher, and EURUSD edged lower from the session open of 1.3166. However, a better-than-expected euro zone current account surplus helped support the pair, lifting it up from an early dip to 1.3140 to above 1.3153.



With a lack of data today, the market looked for direction from the Fed’s FOMC member William Dudley’s speech today. He is Federal Reserve Bank of New York President and an important FOMC voting member on interest rates. The market was focusing on whether he would give any hints on further quantitative easing by the Fed, but he did not mention anything and gave mixed signals on the U.S. economic recovery.



The dollar was under pressure by the yen early in the session, with USDJPY sliding to 83.01 from 83.36 open level. Yen soon gave back gains and dollar turned back up to 83.47 yen, taking cue from the EURJPY pair which bounced from 109.79 to 109.16. Earlier in the day in Asian trading, euro hit a five-month high against yen, peaking at 110.14 yen.



GBPUSD broke out of the range it was trading during the Asian session and after opening in Europe at 1.584, shot up to 1.5889. This is the second day of gains for the pound versus the dollar since the U.S. inflation data on Friday. EURGBP fell to a one-month low of 0.8282 after sliding from an early session high of 0.8312. Markets will focus on the UK government budget meeting on Wednesday. British Chancellor of the Exchequer George Osborne will deliver the latest budget plan.



The Canadian dollar gained against its U.S. counterpart, helped by higher oil prices, which is Canada’s major export. USDCAD slid to 0.9906 from a European session high of 0.9929.Crude oil rose sharply in European trading to $107.91 on mixed signs about U.S. economic strength and also due to a cheaper dollar. Also, geopolitical tensions from Iran are keeping prices supported.

Euro zone current account surplus grows to highest since 2007

The euro rose against the dollar and sterling after economic data showed that the euro zone current account recorded a surplus that was much larger than expected, to reach the highest level in five years, basically since March 2007.

January’s current account grew to 4.5 billion euros from December’s revised 3.4 billion surplus. The forecast by the ECB was slightly lower at 3.3 billion euro surplus.

The data are adjusted for seasonal effects and take account of the number of working days in each month.

The report showed that the increase on the balance sheet was mostly driven by a surplus for goods, services and income. There was a deficit for current transfers but was not sufficient to outweigh the other accounts.

The data helped support EURUSD, which was lifted to 1.3164 within an hour of the news from pre-data levels of 1.3142. EURGBP rose to 0.8312 from 0.8298, also within an hour of the data.

The strong euro area current account data seemed to offset weak Italian industrial orders data, which showed a sharp drop in January. Industrial orders dropped 7.4 percent in January from December in seasonally adjusted terms, while falling 5.6 percent from January 2011 in unadjusted terms.

Forex Asia Review – EURJPY hits 4 1/2 – month high

Asian markets were subdued on Monday and most currencies pairs consolidated gains against the dollar after Friday’s soft U.S. data weakened the greenback. The dollar weakened across the board after CPI data showed inflation in the U.S. rose less than forecast. This stoked expectations that QE3 may be likely in the future.


EURUSD opened in Asia at 0.13179 and traded sideways all session, supported above 1.3160 as investors paused to wait for the next catalyst before committing to a direction. A lack of economic data during the session kept the mood quiet.  On Friday, the euro jumped over 100 pips against the dollar after the CPI data, to hit a high of $1.3185.

GBPUSD surged to 1.5859 on Friday and traded a range between 1.5826 and 1.5847 in Asia on Monday.

The euro-yen pair was able to make gains in the Asian session, with EURJPY rising to 110.14, which is the highest level since October 31 of last year. The single currency had an advantage over a predominantly weaker yen, which has been declining sharply ever since the Bank of Japan eased policy last month. Meanwhile, the euro has recently stabilized following the approval of the Greek bailout package.

USDJPY traded sideways between 83.34/55, slightly off eleven-month highs. The dollar had risen sharply recently after the BOJ policy easing weakened yen. However, any further gains in the greenback against the Japanese currency will now depend on future U.S. inflation data and how long markets expect the Fed to stick to its low rates policy.

NZDUSD opened in Asia at 0.8250 and rose early to a high of  0.8275 on the back of positive New Zealand data. The Westpac McDermott Miller consumer confidence data rose to 102.4 in the March quarter from 101.3 in the December quarter.

AUDUSD traded higher compared to Friday and opened the week at 1.0591, climbing  to a high of 1.0614. Reserve Bank of Australia Governor Glenn Stevens speech earlier today was somewhat supportive of the aussie as he showed confidence in China’s growth. China is Australia’s major export market.