Daily Market Report 18/09/12

Yesterday the pound sterling continued its recent passivity as again it proved to be an onlooker in the currency markets. With few major announcements in the last week, strengthening against the dollar by the pound, and weakness shown against the Euro have been almost entirely rooted from announcements in the counterparty’s monetary systems.

Today however, offering what seems like a rare insight into the state of the UK economy, official CPI figures will be released at the start of the day. Though again, the most impacting announcement comes from the continent, as the stalwart of the Eurozone, Germany, releases its economic sentiment measure.

Despite the Eurozone’s optimism at its refuge under the recent weeks’ bond-buying announcements, little economic data actually supports the strength being exhibited by the Euro. Discouraging figures from Germany could provoke a deterioration of the Euro as tensions also build over the details of Spain’s looming bailout.

Out in the Far East, Japan’s central bank is taking its first steps towards quantitative easing as it follows the paths that the Fed and ECB have already taken. An attempt to drive down the Yen strength versus the greenback is aimed at tempting foreign importers to shop in Japan, although with Chinese relationships frayed, Japan’s hugely important neighbour could well derail the Rising Sun’s efforts if political tensions continue to mount.

Recovering from a consistent weakening against its 16 major rivals, the dollar finally reclaimed some ground against the Yen, Euro, Aussie and Kiwi with sterling one of the few to continue its pattern. Improving current account data in the US will be data to look out for, whilst FOMC member, Jeffrey Lacker, an atheist of Bernanke’s QE3 beliefs, speaks at 13.30pm which should make for interesting listening.

Today’s Key Announcements:

  • 09.30am – GBP – CPI y/y: 2.5% expected
  • 10.00am – EUR – German Economic Sentiment: Expected to come in negative
  • Tentative – GBP – Bank of England Inflation Letter
  • 13.30pm – USD – Current Account: Slightly improved figure expected

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