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Weekly Currency Market Analysis

GBP The Great British pound took a dive against the euro in the second half of the week, as new data cast a shadow of doubt over economic growth in the UK following a volatile week for the currency.

It was revealed that UK retail sales have fallen faster than analysts predicted, sparking fears that the UK economy is beginning to cool down.

With the Bank of England desperate to keep interest rates low, markets are pushing the pound back in order to meet these interest rate situations.

These figures were particularly worrying given that the UK’s recovery has been in part due to consumer spending.

 

USD

The US dollar, meanwhile, has enjoyed relatively little movement over the past week due to a mixed bag of data.

The American asset has generally been trending lower, with futures traders paring bets regarding when a Federal Reserve rate hike will occur.

However, on Wednesday the Greenback saw gains against a number of currencies thanks to positive domestic data.

The year-on-year Consumer Price Index was expected to drop from 1.7 per cent to 1.6 per cent. However, September’s result held at 1.7 per cent.

In addition, mortgage applications in the US rose from 5.6 per cent 11.6 per cent, boosting the USD further.

 

EUR

The euro edged higher against the US dollar on Friday after the release of upbeat German consumer climate data.

Sentiment improved after it was shown the GfK German consumer climate index had increased to 8.5 in October - up from September’s figure of 8.4. This is despite analysts forecasting the index would fall to eight this month.

Meanwhile, research group Markit said its preliminary Eurozone manufacturing purchasing managers’ index rose to 50.7 this month after reading just 50.3 in September. Meanwhile, the region’s services PMI stayed at 52.4 - slightly higher than expectations of 52.

 

YEN

The yen pulled away from two-week lows against the dollar on Friday after news hit that a doctor in New York had tested positive for the Ebola virus after returning home from West Africa.

This threw the market into turmoil due to the possible repercussions of the virus on the global financial centre.

Kaneo Ogino, director at Global-info Co in Tokyo, told the Daily Mail: "The volatile move was a good chance for some to buy the dollar on dips.


"I think, next week the market will be more event-driven, with the FOMC and the Bank of Japan, so the downside should be limited.”

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