The positive sentiment surrounding the Euro continued yesterday as the single currency rose to a fresh 20-month high against the Dollar despite comments from the French Finance Ministry expressing concerns that the recent strength of the Euro could hamper economic growth. The single currency found support from the M3 data, which showed that money supply into the Euro-zone grew at an annual rate of 8.5% in October, well above the ECB’s 4.5% target. The 3-month moving average is the Central Bank’s preferred measure of Euro-zone inflation and with money supply increasing at such an alarming rate, it seems likely that the ECB will continue raising interest rates next month and beyond into 2007.
The Pound continued to make gains against the majors yesterday, firming to a fresh two-year high against the Dollar and overnight we have tested the major resistance level just under 1.9550 and if broken, we will be trading at the highest level in 14-years. In addition, Sterling made unexpected gains against the Euro, rising 0.4% on the session following comments from the Chancellor of the Exchequer, Gordon Brown, who reiterated that economic growth would exceed forecasts this year. Elsewhere, a separate report on the UK housing market showed that house prices had increased at the fastest annual rate in 17-months in October despite the Bank of England’s decision to lift UK interest rates to 5.0% this year. The focus this morning in terms of economic data will be the release of UK mortgage approvals for the month of October and although the data is expected to show a modest drop from the previous month, the figure will not be indicative of growth in the housing sector.
The Dollar continued to struggle yesterday following a report on U.S durable goods, which showed that orders had declined in October by the most in over six-years as companies become cautious over spending in the face of slowing economic growth. Orders fell 8.3% following a rise of 8.7% in September and a decrease in corporate investment could potentially hamper economic growth going into 2007. In addition, the Dollar came under further pressure as a separate report showed that U.S consumer confidence unexpectedly declined in November despite the sustained drop in fuel prices since mid-July. The index of consumer sentiment dropped to a reading of 102.9 from a revised 105.1 in October and it seems consumer spending will be insufficient in propelling economic expansion following the slowest growth in 3-years. There is some hugely significant data released in the States this afternoon as the revised estimate for U.S Gross Domestic Product is widely expected to remain unchanged at 1.8% in the third quarter.
Data Released 29th November
UK 09:30 BoE Mortgage Approvals (October)
UK 09:30 Consumer Credit (October)
U.S 13:30 GDP / Deflator (Revised Q3)
U.S 15:00 New Home Sales (October)
U.S 19:00 Fed Beige Book
written by Adam Solomon
Related posts:
- The Pound receives a timely boost as UK house prices increase at the fastest pace in over two years
- The Pound makes significant gains against the majors as UK GDP in the second quarter show signs of growth while house prices also increase
- The Dollar rallys against the majors as U.S consumer confidence unexpectedly rose in July despite higher petrol prices and rising interest rates
- The Pound continues to make gains as growth in the UK economy accelerates to the fastest pace in two years
- Euro-zone manufacturing expands at the fastest pace in six years as the ECB considers a more aggressive move towards monetary tightening
