Concerns over North Korea lift USD and YEN
May 26, 2009
Yesterday attention turned to Asia as the UK and US markets were closed. The Yen and the Dollar appreciated after reports that North Korea carried out a missile test drawing international condemnation. The Yen and the Dollar gained as cautiousness in the currency markets increased the demand for the currencies as a refuge- this space will be watched closely amid reports of further missiles being fired.
Looking at the currency markets we have seen EUR/USD retreat from hitting the 1.40 level as demand for dollar increased and the euro weakened with a worse than expected German IFO index coming in at 84.20 compared to forecasts at 85.0. Although analysts commented that a quick recovery for Germany was unlikely the data is still an improvement from last months figure and does follow last weeks better than expected leading indicators for the Eurozone. The Euros cause was further dampened through an article in the Telegraph which cited a German bank regulator raising concerns that the debt level may increase in the nation.
German GDP data came in exactly in line with expectations and the market will now focus on unemployment for May due for release on Thursday. An important week ahead also for the US housing market with existing home sales and new home sales figures due out on Wednesday and Thursday respectively. Later this afternoon we have the US consumer confidence index for May. Very little of note for the UK this week with Nationwide house price data being the most prevalent ahead of next weeks rate decision by the BoE and ECB.
Report by Phil McHugh, Corporate Foreign Exchange
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