Daily currency report
Overview
The greenback reacted positively to the news that the ratings agency, Standard and Poor’s, has upgraded the US credit outlook from negative to stable following recent improvements in the country’s fiscal consolidation plans. Focus is likely to return to the UK with April’s industrial and manufacturing output figures due for release. The manufacturing number is expected to have slipped back into contraction territory with a forecasted reading of -0.3 per cent. Across the pond, wholesale inventories may be worth keeping an eye on as the US economic recovery continues to gather pace.
Sterling
The pound made limited gains against the US dollar and held its ground against the euro on what was a relatively flat day’s trading between the major currencies. Most movement occurred against the Asian pairs as well as the Australian dollar and New Zealand dollar as fears over China’s stuttering economic indicators are causing a sell-off of positions held in these currencies. Focus is likely to shift back on the UK with industrial and manufacturing data due for release. Industrial output in April is expected to have returned to zero growth after a reading of 0.7 per cent the previous month. Manufacturing output is expected to have returned to contraction territory with forecasts of a -0.3 per cent reading from the previous month’s figure of 1.1 per cent. Any forecast-beating results should hold the pound in good stead ahead of unemployment data.
US dollar
There was some good news for the US in the form of a credit outlook upgrade from the ratings agency Standard and Poor’s after it decided that recent improvements in the US economy’s fiscal outlook have made a further downgrade in the near future highly unlikely. Notable data due for release includes wholesale inventories for April, expected to show an increase of 0.2 per cent on the previous month.
Euro
The single currency made up limited ground against its major rivals after European sentiment data came inside forecasts but remained in negative territory. French industrial production also surprised to the upside after smashing the predicted 0.5 per cent and coming in at 2.2 per cent, encouraging analysts to turn to the single currency for riskier position taking.