Sterling loses ground ahead of busy day of data
12/Φεβ/2013 • Currency Updates•
Sterling lost ground yesterday selling off almost a percent against the common currency. There was no major economic data released yesterday to spur the sell-off and it was mainly interpreted as bearish anticipation of today’s economic releases. Today we expect the British PPI and CPI figures, which gives good indication if the UK economy is healthy enough for the BOE to expand it’s asset purchases as planned.
The PPI is expected to rebound about a percent after last month’s marginal depreciation of 0.2%. Annual CPI is expected to stay unchanged at 2.7%. A downside surprise could lead to additional sell off for the pound today as further weakening of the British economy might pressure the BOE into more easing.
The release of the statement from the ECB president last week weakened the EUR more than 1% in just a couple of hours. This is leading to the statement today at 10.30am which could be expected to produce the same volatility. His comments may determine a short-term positive or negative trend. Furthermore, for the euro we saw a slide yesterday in the Euro Stoxx 50 futures market. Which is often an indicator of the underlying market.
There is a quiet day ahead for the greenback. No major economic data released yesterday from the US, the USD did not take on any short term direction and traded with mixed results against it’s counterparts.
Today there is more of the same story, no major data releases scheduled. On the other hand there might be a lot of relative movement in the dollar as significant events are happening in both the euro-zone and the UK.
The President Barack Obama delivers his State of the Union address tonight. He will make proposals for spending on infrastructure, clean energy and education, according to an administration official briefed on the speech. Obama will argue that fostering economic growth remains the best strategy to narrow a federal budget gap that has exceeded $1 trillion in each of the last four years.