Daily Market Report – 03/07/2014

The pound gained against it’s major currency counter-parts yesterday with data stating a further increase in housing prices, up 1%, which was 0.5% ahead of target. We also saw construction PMI beat targets. Despite the relatively light news, it was big news for an economy underpinned by housing prices and led to further Pound strength  

With little news out from the Euro-zone the focus is back on Draghi, with the area looking for him to light the way towards economic recovery. Analysts are expecting Euro-zone interest rates to stay at record lows until the end of 2016. This should signal further Euro weakness. 

On Wednesday US Federal Reserve chair Janet Yellen discussed a number of issues that the US is currently facing. One of the major focuses being Lending and the potential effect that interest rates can have. When discussing historical interest rates she defended the low interest rates that the US have had stating higher interest rates would have increased unemployment and would not have closed regulatory gaps that allowed large banks to escape "comprehensive" supervision. 

Yellen also stated that an interest rate rise is not likely until early next year. Yellen also suggested that we are likely to see the US take a lead from the UK and implement tight measures and oversight on it’s financial system.

The US also had ADP unemployment figures out coming in at 281k, which was well ahead of forecast and caused some short term dollar strength.

Today we have a lot  of news out from the US with it being independence day tomorrow. Non-farms are coming a day early, with forecasts positive, we could see USD strength later on in the afternoon.  

Key Announcements:
10:00- EUR-Euro-Zone Retail Sales (MoM) (MAY) expected to be lower at 0.3%   
12:45 -EUR-European Central Bank Rate Decision  expected to be unchanged at  0.15%  
13:30 -USD Change in Non-farm Payrolls June expected be lower at 213k
13:30 -USD Unemployment Rate June expected to be unchanged at  6.3%  

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