British Expats - Weekly Market Update 02-02-2011

UK
Nationwide house prices were released on Tuesday showing a month on month fall of -0.1% versus a previous of 0.4%. This was however slightly better that the -0.4% forecast. The annualised figure was however overall worse than expected at -1.1%, vs a forecast of -1.0% and a previous of 0.4%.

Also released on Tuesday was the CIPS manufacturing PMI (Purchasing Managers Index) for January. The figure released is derived from continuous monthly surveys of business conditions and track what is actually happening at individual company level. Used by the bank of England, the PMI indices are based on carefully selected panels of executives in companies who report each month on real events. January’s manufacturing figure posted better than expected results at 62.0, vs an expected 58.0 and a previous 58.7.

This positive PMI news however, was outweighed by the Bank of England’s disappointing mortgage approval figures for December. Posting at 42.6k vs a forecast of 46.5 and a previous of 47.3k

Further CIPS PMI for the construction sector was released this morning, continuing the good news from Tuesday’s manufacturing figures. The index figure released was 53.7 vs a forecast 49.5 and Previous 49.1. The construction sector data isn’t deemed to be as integral as the manufacturing or service sectors, however it is still good that it shows a trend from the figures released earlier in the week. All eyes will be looking towards tomorrows PMI for services to see if the trend continues.

Eurozone
Only 2 important pieces of data from Europe so far this week.

Firstly, Europe’s manufacturing PMI, released on Tuesday, mirrored the UK coming in higher that expected at 57.3 vs a previous and expected 56.9.

Secondly, the European unemployment, also released on Tuesday remained unchanged at 10%, closely in line with expectations at 10.1%.

Lots to look out for from Europe tomorrow with the services PMI, retail sales for December and the ECB rate announcement and press conference.

GBPEUR
Range of the week: 1.1597 – 1.1747
Variance of the week on £10k €150

US
As with the UK and Europe’s manufacturing PMI this week, the Chicago Purchasing Manager figures for January were released on Monday at 68.8, vs a forecast of 64.5 and previous of 66.8. Continuing the positive news the manufacturing ISM unexpectedly increased to 60.8 in Jan, the fastest pace in nearly seven years in January fm 58.5 in the previous month. ISM Manufacturing assesses the state of US industry by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Though manufacturing accounts for a relatively small portion of GDP, fluctuations in manufacturing tend to bear the most responsibility for changes in GDP

Despite these positive figures the USD has weakened this week. This has been attributed to solid global manufacturing data boosting risk appetite, which often results in funds moving out of the USD safe haven into other currencies. Concern over the ongoing problems in the Middle East has also pushed oil prices up to $100 a barrel this week for the first time since 2008, which will also be contributing to the ongoing USD weakness.

Coming up for the rest of the week, today we have ADP unemployment figures and non farm payrolls on Friday. And tomorrow non-manufacturing PMI will be released.

GBPUSD
Range of the week: 1.5819 - 1.6228
Variance of the week on £10k $409

Australia
The Reserve bank of Australia met on Tuesday and left interest rates unchanged at 4.75 %. Commenting on the recent floods, the RBA said they will continue to asses the effects and subsequent recovery, along with all other factors that have a bearing on economic conditions. However, the board judged that the current stance remained appropriate in view of the current general outlook . Keeping GBPAUD very much in the same ranges as last week.

GBPAUD
Range of the week: 1.5899 – 1.6106
Variance of the week on £10k AU$207

New Zealand
No major data this week

GBPNZD
Range of the week: 2.0453 – 2.0796
Variance of the week on £10k NZ$343

Canada
Canada’s GDP for November showed a month on month improvement for November at 0.4%, vs a forecast of 0.3% and previous 0.2%. When annualised however, the GDP figure year on year at 3.0% was slightly worse than the previous number at 3.4%

GBPCAD
Range of the week: 1.5866 – 1.6116 -
Variance of the week on £10k CA$250