Sterling continues to move higher
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Sterling rounded off a good day yesterday with relatively muted overnight session, in preparation for a rare quiet data release day in the UK today.
Data released yesterday afternoon showed that US factory orders rose unexpectedly in November, growing by their highest level for eight months. Meanwhile the minutes of the December Federal Reserve meeting show the central bank’s acknowledgement that the rebound seen in data in recent weeks could well continue, though it claims it is in no rush to change policy stance.
Commodity prices and oil fell yesterday for a second day running, as prices corrected after a sharp year end rally. Thos drove down commodity linked currencies like the Australian and New Zealand dollar, the former coming off a 27 year high over the Christmas period.
Sterling was one of the few currencies to rally versus the dollar yesterday, though it did struggle to hold its gain over the day.
With better than expected UK CIPS Manufacturing PMI for December Sterling was encouraged that his may be among many other data releases which supports the hope that the UK’s recovery momentum can be maintained this year.
US Data today should set the tone, and markets will shift attention to the release of the US non-manufacturing ISM survey for December, as well as last month’s ADP employment report, which should provide a direction ahead of the release of Friday’s official payrolls data.
Poland’s Zloty has started the year well advancing to its strongest position against a basket of currencies in 2 months as central bank Governor Marek Belka was reported as saying that policy makers should raise interest rates.
The Japanese Yen fell victim to the Nikkei Stock Average decline being dragged down by the banks. Yesterday’s volatile trading session saw stocks change directions more than 110 times with the suggestion that the US will lead a global economic recovery and oil producers fell on lower crude prices.