Daily Market Report 24/06/2013

With very little data to drive markets, Friday saw a continuation of US dollar strength as markets continue to be optimistic over the likelihood of the Fed tapering its quantitative easing program imminently. The pound finished 1.97% lower for the week.

The UK did however have positive data on Friday as public sector net borrowing rose less than expected from £6.623bn to £10.535bn, adding to sentiment that the economic recovery in the UK remains on track.

The only notable data came from Canada, which generally disappointed investors, driving the Canadian dollar to a six month low against the pound. The rate of inflation in May rose less than expected to 0.7% instead of 0.9% and retail sales rose less than a forecasted 0.3% to 0.1%.

Some profit taking and talk of the Reserve Bank of India intervening to prevent further falls in the rupee was seen on Friday with the pound losing 1.10% against the rupee. However funding risks for India’s record current account deficit still persist over a combination of rising US treasury yields and the potential for the US dollar to continue to strengthen.

The euro zone will come into focus this morning with German IFO business climate set to improve in June from 105.7 to 105.9. Later today Fed Bank of Dallas President Richard Fisher is set to speak on US monetary policy and the economy in London.

Looking ahead to the rest of the week, the US will once again come into focus with a report set to reveal that consumer spending rose to its highest in three months led by a growing demand in automobiles. Durable goods orders and recovery in house prices in the US are also set to improve adding to the Fed’s case for tapering QE.  

Key Announcements:

9.00am – EUR – German Business Expectations (Jun): Improved from 101.60 to 102.50.

9.00am – EUR – German Current Assessment (Jun): Fallen from 110 to 109.40.

9.00am – EUR – German Business Climate (Jun): Came in as expected to 105.90.

13.30pm – USD – Chicago Fed National Activity Index (May): Previously at -0.53.

15.30pm – USD – Dallas Fed Manufacturing Business Index (Jun): Expected to improve to -2.50.

17.30pm – USD – FOMC Member Fisher Speaks.