Daily Market News 18 Mar 2011

Daily Market News 18 Mar 2011


Yesterday’s Market Movers

  • Construction figures from the EU came out better than expected which had the effect of helping EUR/USD trade above the key 1.40 level as well as holding strong against the GBP, due to increasing speculation about a forthcoming hike in interest rates.
  • A 2011 high for EUR/USD of 1.4052 was helped by strong demand in the Spanish bond auction that took place yesterday morning. In the slightly longer term though this could see Euro weaken slightly as it pushes away from the immediate idea of the need for a rise in interest rates in the EU.
  • The US CPI figures and both initial and continuing jobless claims came out positively yesterday, causing the surge of risk appetite that saw cable jump 1 cent to trade in the high 1.61 levels. The huge impact of this may be due to the recent risk aversion that had been in place due to the ongoing problems in Japan and Libya.
  • A positive Federal manufacturing survey figure also helped this notion of risk appetite.
  • The industrial production figure in the US came out considerably worse than was expected and this could be a possible reason we did not see risk appetite cause GBP/USD to keep rising and test the 1.62 levels again.
  • These are still volatile times in the market however and any further incidents in Japan or Libya could see risk aversion step back into play and cause the USD to strengthen considerably against its major counterparts.

Today’s Market Movers

  • German PPI is due out today with the consensus that it will be an improvement on previous YoY, although a decrease MoM. As the leading economy in the Euro Zone, if this does come out worse than expected MoM then we could potentially see interest rate hike speculation slowing which may see the Euro weaken against some of its major counterparts. If this comes out better than expected however then we may see a reaction in the opposite direction.
  • We could expect to see GBP strengthen somewhat against the Euro towards the end of the day if the UK trade balance figure comes out better than expected, but most likely this could be due to the trend this week being the Euro strengthening against the GBP so investors will need to square off their positions. (GBP/EUR)
  • There is no data out in the US today so any movements are likely to be due to risk appetite or aversion should there be any major occurrences in Libya or Japan.