Stock markets across the globe enjoyed a more successful day on the back of the positive signs of economic recovery revealed in the US, with the Nikkei 225 and Dow Jones in particular profiting as a result. On the currency front, the dollar fought back against the euro and temporarily made in-roads on sterling before positions in the greenback were sold off yet again prior to market close. Consequently, cable touched new highs for this quarter leaving the doors wide open for dollar buyers to take advantage. Data is likely to follow theme as, apart from euro zone inflation figures, markets will have to wait for the US to open for more economic data releases. Industrial output, manufacturing output and sentiment data are all due with optimists hoping they will show the US economy in a better light. UK investors may also start to focus, with the Bank of England minutes due for publication.
Sterling
UK investors are likely to spend time setting up their positions ahead of the Bank of England minutes due. It should be interesting to see the MPC’s final stance under Mervyn King before the arrival of Mark Carney in a few weeks’ time, with many predicting an injection of quantitative easing over the next few months. Sterling reached new highs for this quarter against the US dollar as traders continue to back the UK currency following a strong week of data releases.
US dollar
US investors felt a wave of relief after retail sales increased by more than expected, with growth coming in at 0.6 per cent which easily beat the 0.4 per cent figure expected. Weekly jobless claims also put the US economy in a better light with 12,000 fewer claims for state unemployment benefit registered over the last seven days. Focus is once again likely to fall on the world’s largest economy with a string of data due.
Euro
It was a quiet day for the single currency with traders gearing themselves up for busy economic calendar for the euro zone area. Before then, Q1 employment figures and the final inflation number for May will be announced, Recent euro strength could be wiped out if flash manufacturing and service figures fail to meet expectations so it wouldn’t be surprising if traders hold off on any significant bets in the euro.