Good morning and welcome to today’s foreign exchange daily market commentary on Wednesday the 21st of March
The UK
Following a stronger than expected inflation report yesterday, GBPUSD traded within a tight range of 1.5830 to 1.5886.
George Osborne presents the UK budget today with a rise in tax allowances up to £10k expected to headline, today’s budget could increase annual gilt sales to the second highest amount on record.
GBPEUR traded at a high of 1.2024 and a low of 1.1967 during yesterdays session.
Bank of England Chief Economist Spencer Dale said yesterday that UK inflation may not slow as much this year as forecasted, mainly due to tensions in the Middle East pushing up oil prices.
UK Public sector borrowing was more than twice as high as expected in February, reading £12.9bn after a £5bn figure was forecasted. Since the release at 9:30am Sterling has weakened against USD and euro, dropping from 1.5922 to 1.5842 against the greenback.
…………………………………………………………………………………………………………………
Worldwide
EURUSD slipped to an overnight low of 1.3172, and the euro may continue to lose ground as the fundamental outlook for the region deteriorates.
US home building fell in February, but permits for new construction reached their highest levels since 2008, showing the recovery in the sector to be very unstable.
USD rallied against commodity-linked and higher-yielding currencies amid a surge in risk aversion. USD gained 1% against NZD, and 1.1% versus AUD during yesterdays session.
The IMF has encouraged the Swiss to return to a free floating currency once inflation returns to a comfortable level and growth picks up.
In the early hours of this morning Greece’s Parliament approved a new €130bn loan deal, but now faces the challenge of implementing the tough measures set as a precondition for the loan.
JPMorgan forecasts Greece may need an additional €20bn over the next three years as austerity measures and growth fail to meet targets.
The New Zealand current account deficit came in a $2.8bn, and their Finance Minister said he expects the deficit to increase.
Xia Bin, a former adviser to China’s central bank, urged the country to be more open about their monetary policies as they look to free up interest rates and increase the yuan’s role as an international currency.
