Sterling rises as UK retail spending holds up
Sterling improved in European morning trade on Tuesday as a slowdown in high street sales was less dramatic than feared.
The British Retail Consortium said like-for-like UK retail sales fell 0.3 per cent in February. Although this was sharply down on the +0.5 per cent recorded in January, it was better than many of the figures bandied about in the weekend press.
This allowed the pound to strengthen 0.7c to $1.921 against a soft US dollar, 0.1p to £0.6893 against the euro and Y0.7 to Y201.94 against the yen.
The New Zealand dollar was once near the top of the leaderboard, rising a further 0.3c to a fresh 22-year high of $0.7378 against its US namesake, as carry trade investors continued to buy the kiwi to benefit from high interest rates.
The market is split almost 50-50 as to whether the Reserve Bank of New Zealand will raise its main interest rate, already the highest in the developed world at 6.5 per cent, by a further 25 basis points on Thursday.
The internal debate at National Australia Bank is a microcosm of the market’s uncertainty over Thursday’s rate call. Citing data showing a 4.8 per cent fall in building work in the fourth quarter, Tim Fox, head of market strategy, said: “Our NZ economists now see only a 50 per cent chance of a rate rise. However, with inflationary pressures building they still believe that the RBNZ will eventually be forced to move, the question is whether that will be in March or April.”
The Australian dollar, another high-yielder, rose 0.5c to a one-year high of $0.7950 against the greenback.
The US dollar was weak across the board, slipping to $1.3254 against the euro and Y105.02 versus the yen, with some commentators citing data earlier in the week from the Bank for International Settlements suggesting Asian central banks are continuing to diversify out of the dollar, as a cause.
The yen was also soft, slipping to Y139.22 to the euro, as nominal January household spending in Japan rose just 0.5 per cent year-on-year, below expectations for a 2.1 per cent increase.
The British Retail Consortium said like-for-like UK retail sales fell 0.3 per cent in February. Although this was sharply down on the +0.5 per cent recorded in January, it was better than many of the figures bandied about in the weekend press.
This allowed the pound to strengthen 0.7c to $1.921 against a soft US dollar, 0.1p to £0.6893 against the euro and Y0.7 to Y201.94 against the yen.
The New Zealand dollar was once near the top of the leaderboard, rising a further 0.3c to a fresh 22-year high of $0.7378 against its US namesake, as carry trade investors continued to buy the kiwi to benefit from high interest rates.
The market is split almost 50-50 as to whether the Reserve Bank of New Zealand will raise its main interest rate, already the highest in the developed world at 6.5 per cent, by a further 25 basis points on Thursday.
The internal debate at National Australia Bank is a microcosm of the market’s uncertainty over Thursday’s rate call. Citing data showing a 4.8 per cent fall in building work in the fourth quarter, Tim Fox, head of market strategy, said: “Our NZ economists now see only a 50 per cent chance of a rate rise. However, with inflationary pressures building they still believe that the RBNZ will eventually be forced to move, the question is whether that will be in March or April.”
The Australian dollar, another high-yielder, rose 0.5c to a one-year high of $0.7950 against the greenback.
The US dollar was weak across the board, slipping to $1.3254 against the euro and Y105.02 versus the yen, with some commentators citing data earlier in the week from the Bank for International Settlements suggesting Asian central banks are continuing to diversify out of the dollar, as a cause.
The yen was also soft, slipping to Y139.22 to the euro, as nominal January household spending in Japan rose just 0.5 per cent year-on-year, below expectations for a 2.1 per cent increase.
posted by Wise Money @ 9:54 AM
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