Daily Market Report 26/10/12

As the anticipated news broke that the UK exited recession in the third quarter, sterling congruently grew with the buoyancy that was awash in the economy.

Originally expected to come in at 0.6%, a surprise figure of 1% was released as signs that the UK’s economy is improving. The Bank of England’s deputy governor claimed Britain to be ‘past its worst’, taking great confidence from the result, investors caused the pound to rise against almost all major counterparts.

It is worth noting that these gains are, in large part, the residual economic effects from the summer Olympics, however this did not prevent a consistent rally against the euro and consolidated early gains against the greenback.

The big news of the last night saw the Bank of Japan announce further stimulus in a move to fend off recession in the far eastern country. With markets already prepared for the announcement, shown by a weak yen performance throughout the day, the currency actually showed early strength on the back of the release, a move complemented by poor performance in Asian stocks.

In the US, generally positive data showed a continuation of the momentum seen in recent weeks. Capping sterling’s gains, the positive data showed investors that QE3 is taking effect, whilst negating the speculation that the Fed will pump more monthly stimulus.

News this morning shows Spanish unemployment breached 25%. Already the rise has caused bond yields to increase, piling on the pressure for Prime Minister Rajoy to step up his bailout efforts.

 

Today’s Key Announcements:
  • 08.00am – EUR – Spanish Unemployment Rate: 25%, up from 24.6%
  • 13.30pm – USD – Advance GDP q/q: expected to rise to 1.9%
  • 13.30pm – USD – Consumer Sentiment: expected to marginally fall to 82.7

 See previous Daily Market Reports