UK 4th Quarter GDP revised down
The Pound was unable to advance on the exchanges as UK 2006 fourth-quarter Gross Domestic Product (GDP), the key gauge of economic growth, was revised down to 0.7% from 0.8%.
Losses were limited however as the figure still contributed to an overall growth figure of 3% for the year as a whole and did little to dampen expectation that the next move by the Bank of England’s Monetary Policy Committee will be a near-term 0.25% hike in interest rates.
Also in the UK, a survey by the Nationwide Building Society showed that annual house price inflation had slowed to 9.3% from February’s 10.2%. There are growing signs that the MPC’s three most recent quarter-point rate rises are starting to filter through into the housing market.
Nationwide said that although the rate of increase was slowing due to a fall in demand (driven by more expensive borrowing terms), a shortage of supply would see prices remain buoyant.
The Federal Reserve Chairman, Ben Bernanke, addressed Congress yesterday and he echoed recent concerns and uncertainty about the state of the US economy. He also said that recent measures of inflation were ‘uncomfortably high’. This clearly limits the FOMC’s ability to loosen monetary policy in light of the downturn in most other economic indicators.
This uncertainty spread to US Stock Markets yesterday, with the Dow Jones down over 100 points and the NASDAQ down 20. Yesterday’s US Factory Orders showed an increase of only 2.5% against expectations of a 3.5% rise.
The Japanese Yen was the beneficiary of carry-trade unwinding yesterday and rose over 1 per cent against most major high-yielding currencies. Investors, looking to increase yield by purchasing assets in high earning currencies (e.g. GBP, USD, NZD, AUD), funded by borrowing in cheaper currencies such as the JPY, reversed many of these positions yesterday as concerns about the US economy and political tension with Iran surfaced again.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Losses were limited however as the figure still contributed to an overall growth figure of 3% for the year as a whole and did little to dampen expectation that the next move by the Bank of England’s Monetary Policy Committee will be a near-term 0.25% hike in interest rates.
Also in the UK, a survey by the Nationwide Building Society showed that annual house price inflation had slowed to 9.3% from February’s 10.2%. There are growing signs that the MPC’s three most recent quarter-point rate rises are starting to filter through into the housing market.
Nationwide said that although the rate of increase was slowing due to a fall in demand (driven by more expensive borrowing terms), a shortage of supply would see prices remain buoyant.
The Federal Reserve Chairman, Ben Bernanke, addressed Congress yesterday and he echoed recent concerns and uncertainty about the state of the US economy. He also said that recent measures of inflation were ‘uncomfortably high’. This clearly limits the FOMC’s ability to loosen monetary policy in light of the downturn in most other economic indicators.
This uncertainty spread to US Stock Markets yesterday, with the Dow Jones down over 100 points and the NASDAQ down 20. Yesterday’s US Factory Orders showed an increase of only 2.5% against expectations of a 3.5% rise.
The Japanese Yen was the beneficiary of carry-trade unwinding yesterday and rose over 1 per cent against most major high-yielding currencies. Investors, looking to increase yield by purchasing assets in high earning currencies (e.g. GBP, USD, NZD, AUD), funded by borrowing in cheaper currencies such as the JPY, reversed many of these positions yesterday as concerns about the US economy and political tension with Iran surfaced again.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
posted by Wise Money @ 1:16 PM
0 Comments:
Post a Comment
Links to this post:
Create a Link
<< Home