Daily currency report
In the eurozone, money supply figures jumped, but private sector loan growth remained in negative territory, which does not bode well for growth. Eurozone sentiment figures will be released alongside German employment data. Investors are not likely to be surprised by weak sentiment and will monitor carefully any slippage in the German labour market. Data from the Bank of England has been released early and showed UK consumer credit dropping below economic forecasts, although mortgage approval numbers jumped to a nine-month high. Nationwide house prices were released just under expectations. Developing fears over a possible ratings downgrade have helped to limit sterling’s upside ahead of CBI distributive trades data. In the US, a string of economic updates are due, but investors will probably continue to monitor comments regarding progress in negotiations over the US fiscal cliff.
Sterling saw a surprise after consumer credit figures, which are published by the Bank of England, were released early. The figures had found their way to the central bank’s website earlier before being taken down, but with slight damage already done, the central bank decided to go ahead and officially publish the figures. Money supply figures will still be released, but earlier numbers did show mortgage approvals move to highs not seen since January.
Some in Washington may feel a bit more gloomy about the fiscal cliff negotiations, but President Obama hopes to have the negotiations wrapped up by Christmas. His comments came on the back of remarks from Republican House Speaker John Boehner, who said that he was also optimistic a deal could be done, but with no tax increases on high earners. His optimism is encouraging, but if he keeps up the statement on taxes, then the deal might be hard to come by.
The euro is opening up higher against the US dollar after suffering losses. While investors continue to question the viability of the Greek debt reduction plans put forward by lenders, there was some good news in Spain offsetting those worries. EU regulators gave the green light to go ahead with restructuring plans that would enable Spanish banks to qualify for approximately €50 billion in loans. That should help recapitalise the Spanish banking system in the short term.