Daily Market Report 13/05/13

Friday witnessed some extraordinary activity with the US dollar making further gains against the pound and the euro. The bullish sentiment on the US dollar has been fuelled by positive data generally surrounding US employment that has surpassed expectations recently. This is a key indicator into how the US economy is performing. Should the employment figures in the US continue to improve; the Federal Reserve will have more options available to them in terms of reducing the fiscal stimulus measures that have implemented thus far.  

Friday witnessed some extraordinary activity with the US dollar making further gains against the pound and the euro. The bullish sentiment on the US dollar has been fuelled by positive data generally surrounding US employment that has surpassed expectations recently. This is a key indicator into how the US economy is performing. Should the employment figures in the US continue to improve; the Federal Reserve will have more options available to them in terms of reducing the fiscal stimulus measures that have implemented thus far.  

The amount of ‘cheap’ money available at the moment has undoubtedly helped buoy markets across the globe. However with the potential for the US to slow down their QE program, could this seriously diminish the appetite for risk? The UK failed to improve on its recent string of positive data on Friday as construction output came in at a disappointing -7.4%. However, this week the Bank of England is expected to lower its inflation forecasts perhaps suggesting that pressure on consumers to make ends meet may finally let up.

This morning we have already had data from China who have announced that their industrial production missed expectations although still coming in at a positive 9.3%. From the weekend G7 finance ministers agreed to remain vigil regarding the yen as we have seen Japan’s monetary policy weaken the currency dramatically stating that they will tolerate further weakness as long as growth is also present.

The US and the US dollar will be in focus today with retails sales expected to improve marginally by 0.1% for the month of April. With both GBPUSD and EURUSD rates sitting at the bottom of their respective trading ranges; a continuation of the US dollar’s strength today and also a close below Friday’s low could prompt a new trend for the US dollar with the potential for more downside on both currency pairs.

Key Announcements:

13.30pm – USD – Retail Sales (MoM) (Apr): Expected to improve to -0.3%.

15.00pm – USD – Business Inventories (Mar): Expected to increase to 0.3%.

23.45pm – NZD – Retail Sales (QoQ) (Q1): Expected to fall to 0.8%.

00.01am – GBP – RICS Housing Price Balance (Apr): Expected to improve to 2%.