Daily Market Report 1/02/2013

The US dollar showed weakened for the third consecutive day, with the main fall against the euro, as figures released yesterday afternoon showed a higher than expected rise in the number of people filing their first claim for unemployment benefits in the US.

The news will no doubt disappoint committee members of the Federal Reserve, who on Wednesday announced they will maintain their stance on quantitative easing until conditions improved in the labour market.

As mentioned briefly yesterday, the pound drew support as UK consumer confidence rose to -26 from -29 in December and also the average cost of British homes rose by 0.5%. However gains for the pound were short lived as longer term concerns about the UK economy weighed on investors.

There was mixed data from Germany as retail sales figures fell to -4.7%  against an expected -1.6% and inflation fell below market expectations to 1.7%. However data also showed the number of unemployed people in Germany fell by 16,000 in January bringing the unemployment rate down to 6.8%.

GDP figures from Canada showed that the country grew by 0.3%, higher than forecasts, causing the Canadian dollar to strengthen against many of its counterparts.

The euro has started on the front foot this morning as manufacturing figures from Spain, Italy, German and the euro zone as a whole all beat market expectations. UK and US manufacturing figures are also due for a release today. However the main focus will be the employment situation in the US with non-farm payrolls and the unemployment rate released at 13.30pm.

The recent US dollar weakness provides dollar buyers an opportunity to take advantage of present levels for their requirements, given that the outlook for the UK economy remains negative and the pound is still the underdog.

Key Announcements:

9.28am – GBP – UK Markit Manufacturing PMI: Expected to fall to 51.

10.00am – EUR – Consumer Price Index: Expected to stay at 2.2%.

10.00am – EUR – Unemployment Rate: Expected to rise to 11.9%.

13.30pm – USD – Nonfarm Payrolls: Expected to show an increase of 160,000.

13.30pm – USD – Unemployment Rate: Expected to remain at 7.8%.

15.00pm – USD – ISM Manufacturing PMI: Expected to decrease to 50.6.