Sterling Shines !

Today we have already seen the RICS survey from the UK which was

RICS Survey

RICS Survey

as expected, better than the previous month’s assessment. This indicates that although there are still more surveyors seeing falling prices than seeing rising prices across the country, the number has reduced. A further sign that the severe squeeze on credit was coming to an end and that sentiment amongst home buyers was improving.

Sterling remained bid, especially against the Euro following comments from Axel Weber, a member of the European Central Bank’s governing council, who said the ECB would announce a package of “non-standard measures” when it meets in May. However with next weeks budget on the horizon we could see end of week profit taking in this currency pair

The dollar strengthened against the euro and yen after data showing a monthly fall in US inflation data boosted haven demand for the currency.   US consumer prices fell in March by a larger than expected 0.1 per cent to record their first annual drop in more than 50 years. Core consumer prices, comprised of data stripping out energy and food prices, rose by 0.2 per cent the data clearly indicates that the US economy is still mired in a deep recession.

The Dollar experienced no lasting damage from the release and sentiment was strengthened by both Obama’s and Bernanke’s speeches to the people. Whilst not being exactly gung-ho about the immediate economic up-turn in the US, they did both offer a positive outlook.

The real problem might still be that the authorities will rely on the consumer to kick-start activity that, having seen their combined wealth diminish by something of the order of $5 trillion since the start of the downturn, might prove reluctant to get involved.

This leaves US industry to shoulder the responsibility and hence the market is back to watching corporate reporting and the economy needing a weaker US dollar.

As long as risk appetite remains then Sterling, Australian and New Zealand dollar will continue to perform well. But be aware any sell off in the global equity markets will see a rush for the exit and again a large scale buying of US dollars

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Posted in Currencies Direct Tagged: currency market updates, ECB, European Central Bank, RICS survey, US economy