• Pound volatile despite strong data
  • German producer prices show surprise jump
  • Dollar gains despite Trump fears
  • Yuan set for weekly gain 

Sterling swings despite positive retail sales data

The pound suffered from extreme swings yesterday, initially making strong gains across the board before shedding all of its gains against the dollar and the vast majority against the euro. A significantly better than expected UK retail sales number provided the pound with strong upside support, after the monthly index came out 1.3% higher than expected and the annualised index rose a further 2%.

Despite this, positive data from the US saw the pound shed all of its gains and end the day down 0.1%. It was a similar story against the euro, which regained some ground against the pound, with the pound ending the day up just 0.3%.

A lack of economic data releases today could see the pound come under pressure from wider markets.

Euro supported by positive German data

The euro struggled yesterday, losing ground across the board after a lack of economic data releases left investor focus fall to wider markets to drive the single currency’s price action. The single currency ended up losing over half a percent against the dollar and 0.3% against the pound. The euro initially lost over 1% against the pound but as investors took short term profits the currency managed to claw back some of the day’s losses.

This morning we have had the release of German producer prices data, which has provided the euro with some support. The monthly index rose 0.2% more than was expected to 0.4% for the month, while the annualised figure also rose by 0.2% to 3.4%. Off the back of this the common currency has enjoyed some, albeit limited, support.

Dollar volatile as Trump issues continue to pressurise currency

The greenback suffered a volatile day yesterday, gaining marginally against the pound after a day of large swings and gaining half a percent against the euro. Positive UK retail sales data initially saw the dollar lose ground to the pound; however, a batch of positive domestic data allowed the dollar to regain any ground it gave up.

Initial jobless claims were predicted to rise slightly but surprised investors by falling 4,000. This was joined by a fall in continued jobless claims, as well as a surprise jump in the Philly Fed business index. Markets had predicted a 2.5 point fall but sentiment jumped when the index rose by 16.8 points to 38.8.  Despite the greenback gaining off the back this news, the ongoing uncertainty surrounding the Trump administration likely capped confidence and still points to a weekly loss for the dollar.

A lack of economic data releases today will likely leave investor focus on the ongoing uncertainty surrounding the Trump administration and we may see the dollar driven by any headlines pertaining to this.

People’s Bank of China drop midpoint by biggest level for three months

The Chinese yuan eased overnight after the central bank weakened its yuan midpoint by the largest move in three months. This came after Chinese industrial output and retail sales disappointed earlier in the week. Despite this the yuan is still set for a positive week.

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