GBP Rises After Positive UK Housing and Confidence Data

The pound rose to a one-week high versus the dollar after reports showed U.K. home prices gained for a second month in October and consumer confidence increased.

U.K. government bonds climbed for the first time in three days as Barclays Plc pushed back its forecast for the Bank of England’s first interest-rate increase since 2007 to February from November. Minutes of BOE policy makers’ most recent meeting are set to be published on Oct. 22. A report two days later will show the British economy expanded for a seventh consecutive quarter, according to analysts surveyed by Bloomberg.

“It’s seeing a short-term resurgence,” Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London, said of the U.K. currency. “It’s a slightly more positive risk environment and I guess the underlying theme is still going to be data-driven.”

Sterling rose 0.3 percent to $ 1.6144 at 1:59 p.m. London time after touching $ 1.6151, the highest since Oct. 9. It fell to $ 1.5875 on Oct. 15, a level not seen since November. The pound strengthened 0.2 percent to 79.12 pence per euro.

Investors may sell the U.K. currency as it advances, according to Stretch, who doesn’t “see the justification for a squeeze higher to $ 1.62 or anything of that magnitude,” he said.

via Bloomberg

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Week In FX Asia – EM Woes Go Beyond Tapering And Soft China Data

via MarketPulse:

This weeks Emerging Markets FX landscape bore witness to some extreme price action moves, well beyond the “Fragile Five” that will surely have convinced many investors to contemplate cutting exposure to the region even further.

The EM price movement is not just about the Fed’s tapering plans – investors are also trying to adjust their portfolios to the global market concerns as to whether China can smoothly deleverage its financial sector, and on the timing of the Fed’s first rate hike as QE draws to a close.

Currently, there are no obvious reasons to want to buy the region, in fact the EM currencies with current account deficits and low FX reserves will remain the most vulnerable. Topping many analysts’ lists and source of potential contagion remains the Turkish Lira (TRY). Political constraints on the Turkish Central Bank (CBRT) and dwindling FX reserves would suggest that the country faces a massive battle to stem the loss of market confidence that has certainly widened this week.

After the initial euphoria of the CBRT aggressive rate hike earlier in the week, the TRY continues to trade lower and is ending this Friday’s Euro session on fresh day-lows (2.2832). The market continues to gravitate towards the relative safety of the JPY and the USD after both weak Euro inflation numbers and a disappointing German December sales data print early Friday morning is not helping the 18-member single currency’s plight.

China’s growth prospects are a global concern, with many analysts beginning to slash their Q1 2014 growth forecast from their prior call of 7.4% to a new growth rate of 6%. The governments reform agenda rolled out late last year were greeted with some euphoria by the market. Now that the dust has settled, it’s naïve to suspect that the implementation of reforms could proceed without causing some economic pain to the worlds second largest economy. China continues to face the “three R’s: retreat in growth, structural reforms, and credit risks.”

• Japan Should Start Aiming Higher


• China May Be OK in 2014


• Recovery Signs sees U.S. Dollar’s Best Week in Four Years


• Asian Currencies Lower over China Concerns


• 2014 Shaping Up to be a Worse Year for Emerging Markets


• Japan’s Inflation Accelerates


• Japan Making Progress as CPI up 1.3%


• Malaysia Not Pressured To Raise Rates


• What Happens in EM Stays in EM Says Goldman


• Japan’s Ministry of Finance Says Regions Are On Way to Recovery


• Japan’s PM Abe Hopeful BoJ To Stay the Stimulus Course


• China’s Growth Hurt by Corruption Crackdown


• China Bailing Out Failing Trust Investments


• Market Divided on NZ Central Bank’s Next Move


• Thai Crisis Could Deter New Foreign Investment


• Japan Hits Record Trade Deficit


• Current Yen Level Perfect For Japanese Economy


• Does China Have A Major Shadow Banking Problem?

WEEK AHEAD

* USD ISM Manufacturing

* AUD Reserve Bank of Australia Rate Decision

* NZD Unemployment Rate

* GBP Bank of England Rate Decision

* EUR European Central Bank Rate Decision

* USD Change in Non-farm Payrolls

* CAD Unemployment Rate

* GBP Gross Domestic Product Estimate

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Week In FX Asia – EM Woes Go Beyond Tapering And Soft China Data

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