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Forex Flash: Sizable miss for the first UK hard data of 2013 – TD Securities

UK industrial and manufacturing production fell even more that consensus expectations, “but we would caution that the sticker shock is much worse than the underlying trend in the data that remains close to flat”, wrote analyst Tim Davis.

TD Securities analysts explain the fairly broad based decline in manufacturing that wiped out the 1.5% gain in December: “A shutdown in a North Sea oil platform caused the Oil and Gas sector to fall 4.3% in the month, but in fact, the boost for the utilities sectors from the cold weather more than compensated for this hit within the headline IP data and helped the sectors outside of manufacturing, including the platform shutdown, moderate the weakness in this month’s production data”, wrote Davis.

As we move into the spring and if Eurozone and US demand can firm up, the weaker sterling should start to boost manufacturing and strengthen exports, but it is still too soon. "Today’s visible trade deficit unexpectedly improved from £8.7bn to £8.2, but this was driven by an inventory correction in oil imports, and excluding oil and erratics from the data, exports and imports fell and the deficit worsened", Davis continued, pointing to it as a sizable miss for the first UK hard data of 2013, which seems to seal the fate of Q1 GDP to contract "as we track a -0.2% q/q decline, and makes an extension of QE a coin toss now, with just retail sales and PMIs to update the BoE’s view". "The Minutes and the Budget on March 20th now factor as key risks to explain whether is more stimulus to come from the fiscal side and where the hurdles lie to new QE or easing from the MPC", concluded the TD Securities analyst.

Forex: EUR/USD again at 1.3000 after Spanish debt auctions

Having gone as high as 1.3057 as the US session closed, the EUR/USD gave in to the magnetism of the psychological level at 1.3000 and moved there on the European session. 1.3020 is keeping the pair from bouncing, and the EUR/USD remains subdued to the 1.3000 mark.
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Forex Flash: Steadfast implementation of reforms pushed in Europe – Deutsche Bank

European Commission president Barroso reportedly wrote a letter to European leaders urging "steadfast implementation of reforms", apparently to counter growing criticism of European austerity. According to the NY Times, the letter was accompanied by charts that showed Ireland and Portugal as having benefited from rigorous turnaround programs, but that also showed countries including France, Italy, Belgium and Hungary were still disadvantaged by high labor costs compared with their trading partners.
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