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Daily Video Recap

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Euro Falls on Weak Retail Sales and Troubles in Eastern Europe, Pound Up on Better Services PMI

Thu, Feb 5 2009, 02:02 GMT
by Nick Nasad

CMS Forex

UK Consumer Confidence Declines Again

We begin in the UK, where consumer confidence, as measured by Nationwide, fell further in January, ticking down to 40 from 48 in December. Consumers remain concerned about the economic downturn and the situation in the labor market. Both the present and future expectations sub-gauges declined.

UK Services PMI Surprises Forecasts on the Upside

In a second release from the UK, activity in the services sector contracted yet again, but the pace of contraction eased as the Services PMI indicator rose to 42.5 from December's 40.2. That figure surprised forecasts on the upside and gave the Pound some strength in today's trading. The Euro-zone final version came in at 42.2 which was slightly below its preliminary release.

EUR/GBP - Pound Gains 200 Pips on Weak Euro

The Euro-Pound pair fell 200 pips in favor of the Pound today following the better than expected UK services data. That's a sharp counter rally to what we saw on Monday, following yesterday's ranging conditions. Tomorrow, we have both the Bank of England and the European Central Bank deciding on interest rates with the BOE expected to cut by 50 basis points while the ECB will hold.

GBP/CHF - Rally in UK Stocks Sends Pound 400 Pips Higher vs Franc

The Pound also shot up against the Swiss Franc, rallying more than 400 pips from its low near 1.6410 to set a high near Monday's resistance of 1.6850. Shares in London were up today helping to boost risk appetite during the European session.

GBP/USD - Pound Hits New Weekly High vs Dollar, But Trading Contained

The Pound-Dollar pair rose higher today as well though not with the same volatility seen in the previous two mentioned pairs. The Pound breoke above resistance from Friday's high near 1.45 and set a high for the session at 1.4577 in the NY session following better than expected services data news from the US.

EUR Annual Retail Sales Dissapoint

Euro-zone retail sales were flat on the month in December, which was slightly better than the forecast, though lower than November's 0.6% gain. On the year however, sales fell 1.6%, which undershot forecasts. The data comes in the wake of weaker than expected German retail sales so the picture for the Christmas shopping season for the Euro-zone was bleak despite huge discounts. It's the seventh straight month that the annual pace of sales have declined and shows that consumers lack confidence amid the Euro-zone recession and are unwilling to spend.

EUR/USD - Euro Slides 240 Pips vs Dollar as Easter European and Russia's Currencies Face Woes

The Euro-Dollar pair declined today. The pair slid about 240 pips after testing its high near 1.3070. In the NY session the Euro found support at its intra-day low from yesterday, though its counter-rally was short lived. The Euro was pressured by its weak retail sales data and weakness in currencies from Eastern Europe and Russia that are facing stiff devaluations.

US ADP Finds Economy Has Shed 522K Private Sector Jobs in January

Looking at US fundamental news, the ADP employment change, a private measure of employment, showed the economy shedding 522K in January. The services sector shed 279K jobs, and the goods-producing sector declined by 243K. The overall figure came in close to expectations.

US ISM Non-Manufacturing Rises to 42.9, Surprising Forecasts

Non-manufacturing activity contracted at a slower pace in the US in January as the ISM measure rose to 42.9 from 40.1 in December. That came in above expectations, though anything below 50 separates contraction from expansion. Still, the sub-gauges for business activity, new orders and prices all rose compared to last month, though employment weakened.

USD/JPY - Dollar Stays Within Recent Range vs Yen

The Dollar-Yen pair fell overnight, but recovered in NY trading, until it ran up against the recently established line of resistance at 89.80. US stocks were up in the morning, but then faltered with the Dow Jones index falling into the red. That stalled the greenback's advance and kept the pair in its pre-established range today.

USD/CAD - Loonie Gains for Second Session

The US Dollar-Canadian Dollar rose overnight, setting an intra-day high near 1.2435, before sliding about 180 pips in early NY trading. It set a new intra-day low below 1.2250, and then saw a counter-rally as risk aversion increased as a result of weaker US stocks.

Upcoming Releases

Today, New Zealand posted its unemployment data for the 4th quarter, though it was too late for us to report on this broadcast. Overnight, Germany will release data on factory orders and the UK Halifax Bank of Scotland is expected to release data on housing prices. Tomorrow morning, as we mentioned earlier, the Bank of England and the European Central Banks decide on interest rates with the BOE expected to cut rates another 50 basis points.

Tomorrow, the US has three releases, weekly jobless claims, labor productivity and costs, and factory orders. Canada meanwhile, posts reports on building permits and its Ivey PMI. 

Published on  Thu, Feb 5 2009, 02:04 GMT