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FX Day Trading - 9 September 2010
NIESR sees UK growth continue to decelerate
Bank of Canada raises interest rates for third successive month
Yup...NIESR sees UK growth continue to decelerate
Sterling was moving in the right direction yesterday morning, even before analysts were pleasantly surprised with the monthly Halifax House Price Index (HPI) reading. With the HPI exceeding expectation by posting a 0.2% monthly increase against a forecast of -0.3%, ‘Cable’ (GBPUSD) surged to its highest level so far, for September. Unfortunately, gains could not be sustained and it settled back into mid-range levels overnight.
European Central Bank (ECB) council member Axel Weber, suggested that we shouldn’t get carried away with the belief that the financial crisis was over and warned that it wasn’t yet “business as usual”. With banking concerns hitting headlines again over the last couple of days – not least in Ireland – it is unclear who exactly had been celebrating the end of the downturn, but it was sure to be a small party. Regardless, Weber’s comments did little to prevent the euro’s slide throughout the day.
German Industrial Production rose by 0.1% on the month – well below the forecast of 1.1%. With UK Manufacturing and Industrial Production both coming in at 0.3%, there was little in this data to warrant either a push higher or a reversal of the earlier move.
The Bank of Canada raised interest rates by 0.25% to 1% as expected. The result in the FX spread betting markets was that the ‘Loonie’ strengthened as a result of a more hawkish supporting statement. Around the same time, Building Permits slowed less than expected in Canada and the Ivey Purchasing Managers Index (PMI) reading produced a significantly better than expected number at 65.9 – up from 54.0 last month. Taken together and over this period, the Canadians gained more than 1% against the US dollar.
The only significant data out of the US yesterday was the release of the FED Beige Book. According to the Federal Reserve’s report, economic growth continued over the last couple of months, but at a slower pace than previously and with ‘widespread signs of a deceleration compared with preceding periods’.
Finally, the oft-overlooked but no less relevant NIESR GDP estimate suggested UK economic growth of 0.7% – down from 1.3%.
The National Institute of Economic and Social Research maintained its belief that growth could continue to decelerate. It suggested that ‘the pace of economic growth may have softened in the three months to August, but it is still a robust rate for the UK. Unfortunately, the rate of growth will continue to decelerate over the coming months’. Additionally, the Institute suggests that interest rates will remain on hold ‘until the summer of next year’.
And so with the Monetary Policy Committee (MPC) making its monthly interest rate announcement this morning, you’d be a brave man to bet on anything other than no change.
It’ll be two weeks before the minutes from this meeting are released and we’ll find out whether Andrew Sentance has convinced anyone else to join his one-man crusade to raise the UK base rate.
More potential for online spread betting market movement will come from the Trade Balance data released from the UK, US and Canada throughout the day and China overnight.
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The above content does not constitute investment advice, it is provided purely for information purposes and is delivered as a personal view of the writer. Neither the contributing company (or writer) nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the content.
Note - Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
'FX Day Trading 9 Sep 2010', Article by Moneycorp, last update: 9-Sep-10
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