Daily Market Report 20/05/13

The US dollar continued to dominate the headlines in the currency markets on Friday as the currency continued to strengthen against its peers.

A preliminary report by the University of Michigan showed that consumer sentiment index rose to 83.7 in May surpassing an expectation of a rise of 78. The data added to expectations for a reduction of the Fed’s monetary policy sooner rather than later giving reason for the US dollar to strengthen. GBPUSD closed 0.71% lower and below key support levels and EURUSD closed 0.35% lower.

The US dollar continued to dominate the headlines in the currency markets on Friday as the currency continued to strengthen against its peers.

A preliminary report by the University of Michigan showed that consumer sentiment index rose to 83.7 in May surpassing an expectation of a rise of 78. The data added to expectations for a reduction of the Fed’s monetary policy sooner rather than later giving reason for the US dollar to strengthen. GBPUSD closed 0.71% lower and below key support levels and EURUSD closed 0.35% lower.

Data from Canada on Friday showed their rate of inflation fell to 0.4% in April from a year prior, the slowest in three years. The Canadian dollar fell as a result, on account the data gives the Bank of Canada less scope to raise interest rates and adds to recent data that the growth in the 11th largest economy was slowing.

Euro moves continue to be underpinned by expectations of a further interest rate cut by the European Central Bank, especially if economic data continues to disappoint.

The upcoming week looks set to be busy regarding economic data with the key highlights being the Minutes Meetings from the UK and the USA.

The expectations are for the BoE committee to reveal a 6-3 against vote to expand quantitative easing – so no change there. However following comments made by MPC member Martin Weale last week that he see’s limited scope to expand QE, we could well see a change in rhetoric by the BoE, maybe not in the release of this weeks Minutes, but the next.

Data released overnight revealed that house price inflation rose to 2.1% in May supporting the pound in early morning trade.

There is very little economic data due for release so expect last Friday’s themes to move currency markets.

Key Announcements:

13.30pm – USD – Chicago Fed National Activity Index (Apr): Previous figures were -0.23