UK
David Cameron was quoted as saying the Liberal Democrats are “holding back” Conservative ambitions in areas including tax policy and reforming human rights law. This revelation came just hours before the governing coalition were due to set out their legislative program for the year yesterday.With no major UK data being released yesterday, traders focus was aimed towards the euro debt contagion issues; however this focus will be deterred today with the MPC Interest Rate meeting at midday, where no change in policy is expected.
GBPEUR spent the whole of yesterday’s trading session trading above the 1.24 levels, hitting a high of 1.2493 overnight, the strong resistance at just under 1.25 has caused the pair to fall back significantly and is currently residing around 1.2450.
GBPUSD traded within a 90 pip range yesterday, posting a high of 1.6156 in early morning trade to then trade at a low of 1.6063 shortly after Wall street opened their session. Cable is now trading around 1.6130, there is strong support in place at 1.61 but a close below this level could trigger further losses for sterling.
UK Manufacturing Production was released this morning at 9.30am, the data was slightly better than forecast, the month-on-month reading was 0.9% against the expected 0.4%. Also year-on-year figures beat expectations of -1.3% to post -0.9%.
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WORLDWIDE
Greece are likely to face another election in early June as the nation’s parties appear unlikely to put together a coalition after splintered election results in Sunday’s parliamentary elections. In an unexpected turn of events, the Eurozone decided to withhold €1bn of its next bailout tranche to Greece, the remaining €4.2bn will be disbursed as planned today. Without this €1bn that is already accounted for, Greece face the possibility of not being able to meet their repayments and possibly default next month just before their second election.
German Chancellor Angela Merkel said Wednesday, in an apparent message to Greece that Eurozone members must stick to agreements and the rules of the region’s common currency.
Political uncertainty in Europe continued to put pressure on the euro, while also helping to send the Australian dollar toward parity versus its US counterpart as investors shied away from risk-oriented assets. AUDUSD dropped to its lowest level for 2012, trading at a low of 1.0019 yesterday.
The Polish Central Bank raised interest rates by 0.25% points after signalling the move last month. The Monetary Policy Council raised the benchmark seven-day intervention rate to 4.75%.
Home prices rose in more than half of US metropolitan areas in the first quarter of the year as the housing market showed signs of stability after nearly six years of price declines.
US wholesale inventories rose less than expected in March, held back by the biggest drop in petroleum stocks in nearly two years. Inventories rose 0.3% to $480.44bn, following an unrevised 0.9% jump the previous month, the Commerce Department said Wednesday.
EURUSD traded the day within a 100 pip range for Wednesday, posting a high of 1.3004 and a low of 1.2909. The currency pair finding support from the 1.29 level and with strong resistance holding now just above and below 1.31.
Overnight Aussie employment data beats expectations across the board, bringing GBPAUD back below the 1.60 mark but looks to have now found some support around the 1.5940 mark.
Japanese Current Account data shows an increase from a forecast, however this figure still showed a decline from last month’s reading. The Japanese government continue to support their policy on intervention in the currency markets to control the value of Yen. Last month’s intervention only had a very limited and short lived effect though and traders are expecting stronger action at the end of May. Currently GBPJPY is trading around 128.55.
