Sterling hits 5 year high against US Dollar

Today's Highlights

Sterling hits 5 year high against US Dollar

RBNZ interest rate rise expected

FX Market Overview

I hope everyone had a very Happy Easter. How are the sugar levels then? We start a new shortened week with the thought that David Moyes' fingernails must be mightily relieved this morning. After hanging on by them and biting them at the same time for months, Mr Moyes has been sacked by Manchester United. His appointment has proven to be one of Alex Ferguson's less successful decisions.

Aside from that, we start with a weaker US Dollar, an emboldened Pound and plenty of opportunities for volatility in the days ahead. There is a chance that USD weakness will be exacerbated by an expected dip in existing home sales. That data is due this afternoon. Other than this and the durable goods data on Thursday, the US data diary is sparse this week. Expect the US Dollar to be washed hither and thither by events in Ukraine and elsewhere. The weakness in the Dollar is at odds with the encouraging signs we saw from the Philadelphia Federal Reserve's manufacturing index which hit its highest level in 7 months. That clearly wasn't enough for traders who sold the US Dollar into the weekend.

The Pound starts the week with a spring in its step. There is a distinct lack of UK data today but tomorrow's release of the minutes from the last Bank of England meeting will perhaps give us some hints on the timing of the first interest rate hike in 5 years. The rest of the week brings the CBI retail sector survey, government borrowing and the official retail sales figures on Friday. All of that is very important to the Bank of England and all could well be market moving.

The big mover overnight tomorrow night will be the New Zealand Dollar. There is a very strong chance the Reserve Bank of New Zealand will raise their base rate by 25 basis points and that would bring the base rate back to the pre-Christchurch earthquake level. The NZ Dollar is currently trading around 1.96 to the Pound. I suspect it will be significantly lower after that decision.

This week also brings a smattering of Australian data, (including the inflation figures) and a number of business sentiment surveys to boot. It will be a short sharp and volatile one.

Away from the markets, I don't know if you saw the news over the weekend but there was a story of the ultimate dilemma. Helen Clements and her children were in the lion's enclosure at drive-through safari park, Longleat, when their car caught fire. So, the question is, stay with the car or get out and face the lions. In the end, keepers placed their vehicles between the family and the lions and rescued them but it makes you blood run cold doesn't it. It's a bit like having to choose on the train between sitting next to the smelly bloke or the one with a runny nose. Dilemma!