Daily Market Report 10/05/13

The UK’s recent run of strong economic data continued yesterday as both industrial and manufacturing production beat expectations in March and the Bank of England refrained from expanding its quantitative easing (QE) program.

Industrial production increased by 0.7% and manufacturing output increased by 1.1% prompting the pound to trade higher in yesterdays early morning trade. The pound also drew relief as the BoE kept its QE program at £375bn as well as keeping interest rates at the record low of 0.5%.

The UK’s recent run of strong economic data continued yesterday as both industrial and manufacturing production beat expectations in March and the Bank of England refrained from expanding its quantitative easing (QE) program.

Industrial production increased by 0.7% and manufacturing output increased by 1.1% prompting the pound to trade higher in yesterdays early morning trade. The pound also drew relief as the BoE kept its QE program at £375bn as well as keeping interest rates at the record low of 0.5%.

However despite the good data sterling struggled to trade beyond technical resistance levels against both the euro and the US dollar. Investors will be looking to next weeks inflation report (15th May), where the BoE will release its latest economic analysis and inflation projections, before assessing that sterling should trade beyond these levels of resistance.

The US dollar gathered strength across the majority of its trading counterparts in afternoon trade after the Department of Labour reported that fewer people in the US last week filed for jobless claims. The number of people fell to 323,000 against an expected 335,000.

The news fuelled speculation that the Federal Reserve may have a case for reducing their own QE program especially if you appreciate the better than expected non-farm payroll figures from last Friday.

The US dollar also drew strength as Federal Reserve Bank of Philadelphia President Charles Plosser indicated that he would like to the Fed’s QE program to be decreased.

Today looks set to be quiet on the data front and given the record highs we saw on stock markets this week we may well see a continuation of yesterday’s risk-averse attitude and thus a stronger US dollar.

Key Announcements:

9.30am – GBP – Goods Trade Balance (Mar): The deficit is set to reduce to £9bn.

13.30pm – CAD – Unemployment Rate (Apr): Expected to remain at 7.2%.

14.30pm – USD – Fed’s Bernanke’s Speech.

19.00pm – USD – Monthly Budget Statement.