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Speculation over interest rate decisions

The first significant number was the Eurozone PPI figures which came in well above expectations to boost the single currency and dealers took this as a clear sign that rates would be kept on hold on Thursday.

In the UK however the figure disappointed and PMI services fell to it's lowest figure since March 2003 and came in at 50.4 versus the 52.1 of the previous month. This was a big blow to the expected growth in the UK and it could be a signal that another rate cut could be well on it's way. It was then the turn of the US to release data with manufacturing and services still looking to be having a rough time. Oil prices also went higher increasing pressure on exchange rates and the dollar struggled to maintain the progress that it had made on the previous day. Late trading in the US and in the far east this morning has seen the dollar rally again and it seems that Sterling is the main currency to get hit with cable retreating to around the 1.96 level.

Today in the UK we have industrial output and manufacturing due to show a lower than previous figure at 9.30 UK time. Then it is the turn of Europe to release their Retail sales figure at 10.00 UK time followed at 11.00 by German industrial orders numbers. Bigger figures today could be the US figures as they are due to unveil their mortgage figures and pending home sales. Also due later today we have labour costs, productivity and consumer credit numbers due which should ensure another lively day on the exchanges. In Australia interest rates were left on hold as expected and tonight we will see the release of their unemployment numbers.

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