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Markets Remain in Optimistic Mood

Fri, Jul 24 2009, 12:11 GMT
by Tauane Sousa

Tamley Global Markets

Markets remain in an optimistic mood going into the weekend with stocks having another strong day on the back of some solid earnings reports. Sentiment was also helped by upbeat comments from the Bank of Canada that its recession is virtually over, as well as remarks from Japan that the worst has passed for its economy. All of this optimism helped lift the euro to weekly highs of $1.4291 yesterday but as $1.43 continues to prove elusive it has since fallen back about a cent, with some talk of profit taking going into the weekend.

Markets could also have turned cautious on the euro ahead of this morning’s release of the flash PMI survey results for July, which are expected to show a continuation of the gradual recovery from the lows seen late last year, though still remaining in recession territory and indicating that the eurozone will lag other majors in terms of the recovery cycle. Other key data to watch today from the eurozone include the German Ifo survey. Meanwhile, in the US, the Michigan survey will provide the latest insight in terms of consumer confidence.

Sterling was lifted versus the dollar and euro by yesterday’s news that high street spending was stronger than anticipated in June. Retail sales were up a solid 1.2% on the month, compared to forecasts for a 0.4% rise. Stronger than expected bank lending data also raised hopes of an economic recovery. This morning sees the release of provisional Q2 GDP data, which should provide fresh direction for the UK currency. The data are expected to indicate a marked slowing in the rate of contraction in the economy. GDP is forecast to fall by 0.3% following a record drop of 2.4% in the first three months of the year.

Published on  Fri, Jul 24 2009, 12:12 GMT