Daily Market Report 10/04/2013

Sterling approached the six week high that we saw last Friday as better than expected industrial and manufacturing production in the UK incited speculation that the UK will avoid a triple dip recession.

The British Retail Consortium also revealed its measure of retail sales rose by 1.9% in March adding to the impressive service sector figures released last week. So the question is will the UK avoid a triple dip recession?

The British Chamber of Commerce seem to think so as revealed in their report last week and data released by the National Institute of Economic and Social Research yesterday, show the institute estimate that the UK will probably expand by 0.1% and thus avoid a triple dip recession – but we will need to wait until April 25th to find out.

The rest of the week is devoid of any further economic data from the UK, so investors will need to focus on news elsewhere before positioning themselves.

The US dollar continued to weaken yesterday. Following on from the poor job figures released last Friday and the fairly dovish statement by Federal Reserve Chairman Ben Bernanke on Monday night, it would seem an appetite for riskier assets, following the Bank of Japans announcement for unprecedented stimulus, gave reason for the US dollar sell off yesterday as equity markets continued to rally higher.

Further US dollar weakness could be on the cards if the Federal Reserve fails to signal that a reduction of monetary easing could be on its way soon rather than later in tonight’s minutes meeting. The US government is also set to release data on the budget balance later this evening.

The euro shrugged off poor import and export data from both Germany and France to trade higher against both the pound and the US dollar. Even the news that Slovenia may need a bailout and Cyprus may be running out of time and money to actually receive its first tranche of bailout funds is being ignored by investors with the euro being supported by the increased risk appetite that is filtering into the markets.

The economic calendar is fairly bare today with the only notable item for the market to focus on being the Federal Reserve Open Market Committee minutes this evening.

Key Announcements:

19.00pm – USD – FOMC Minutes.

19.00pm – USD – Monthly Budget Statement (Mar)