Daily Market Report 10/04/2014

USD

So the main focus yesterday was on the Fed Minutes released at 7pm yesterday. We saw the US dollar weaken further as the Federal Reserve played down previous forecasts by some of the policy makers that interest rates might rise faster than previously predicted. They were worried that traders might over react to forecasts that suggested interest rates could be 2.25% by the end of 2016.

GBP

Yesterday the UK’s overall trade balance and goods trade balance (the difference between exports and imports) both reduced, which is typically seen as good news. However, on a closer look at the data it is not so positive. Exports are down to their lowest level since November 2010. Imports have also declined which underlines the IMF’s warnings yesterday that the UK is at risk of an unbalanced recovery which is just built on domestic demand and not international trade.

EUR

German trade balance, data was not so good yesterday. Their traditional trade surplus has decreased from €17.3bn to €15.7bn, indicating that their export volume is shrinking.

Today

Data is quite limited today. The main focus is on the US where both initial jobless claims and continuing jobless claims which is meant to be mixed.

The UKs interest rate decision is also out today, which is indicated to remain unchanged at 0.5% and QE expected to remain the same.

In the absence of any major news, selling pressure on the US dollar may well remain and thus we could see additional GBPUSD upside. GBPEUR still remains relatively flat, with any moves more than likely to be dictated by events and data in the Eurozone seeing as the majority of the optimism surrounding the UK is priced in to the pound.

Key Announcements:

13.30pm – USD – Initial Jobless Claims: Expected to fall to 320,000.