Daily Market News 25 Feb 2011

Yesterday’s Market Movers

Early morning yesterday we had German GDP Q4 come out flat as the markets expected. However, the steady growth in Germany does not seem to be positive enough to support the whole of EU. The euro changed its upwards trend temporarily and dropped nearly 70 pips. The ECB policymaker Axel Weber gave his hawkish views in the afternoon, saying the only way for interest rates is to go up. In addition to the improved EU economic confidence, Euro  gained more than 100 pips from the support 1.37 level.

In the afternoon, we had a good figure from the initial jobless claims from the US. At the same time, durable goods order were released 0.2% below expectations  However it was still published a lot higher from the previous -0.4%. We saw US dollar come up modestly from lows against Swiss Franc and Japanese Yen.

Later U.S. new home sales came out worse than expected and the dollar failed to maintain its position.

After Spencer Dale joined Andrew Sentance and Martin Weale urging early action to raise the rate from its historic low, Sentence spoke in the evening, warning the delayed  interest rate is long overdue, which could mean the Bank of England is forced into more painful action. Sterling against US dollar was pushed on the back of this, finding support at 1.6084 and has been pulled back above 1.6160 last night till this morning.

 

Today’s Market Movers

From UK, we had Gfk Consumer Confidence increase by one point from the previous reading, which supported GBP going back to 1.6150 level. However, we have a negative prediction of the UK GDP for the Q4 at 930. If it comes out as the expectation, we might finish the week at a lower GBP/USD.

German CPI is expected to come out better than the previous. Given the experience we had yesterday, a good German figure might be no longer positive enough for the Euros.

We will have mixture of fundamental data from the US this afternoon: GDP is predicted to have a growth while PPI is predicted to be worse than before. Real Personal Consumption Expenditures (QoQ) is going to decrease slightly according to the consensus. And the market is expecting an small improvement of the Reuters/Michigan Consumer Sentiment Index. US dollar could be effected by multi-factors: the  fundamental data, oil price increase, and the risk aversion caused by the special political situation.