IFX Market Report for 25/04/2012

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    The UK has technically entered back into a recession after Preliminary GDP came in at -0.2% for Q1, continuing its decline from the fourth quarter where the economy shrank -0.3%. As a direct result GBPEUR dropped from 1.2217 to 1.2180, GBPUSD also fell from 1.6140 to 1.6089.UK public sector borrowing was higher than expected in March, but still met the government’s target for the fiscal year as a whole after borrowing for the previous month was revised down. March’s public finance figures suggest that the trend in the UK’s fiscal position continues to worsen.

    GBPEUR traded as high as 1.2276 but sharply declined in the afternoons trading after Germany’s Finance Minister MR Schaeuble defended Germany’s austerity policy. The market slumped to a session low of 1.2214, the markets opened this morning around this level.

    GBPUSD dropped off yesterday on the back of US house prices data, the market touched 1.6162 and traded as low as 1.6109, this morning markets opened around 1.6150. The near term support levels for sterling are now well above 1.60, currently at 1.6030 and 1.6075, this should provide sterling the platform to build and test the October high of 1.6165 again.


    US home prices continued to fall at the start of the year, pushing Standard & Poor’s Case-Shiller home-price indexes down to new post-crisis lows in February. The index fell 0.8% in February from January.

    Sales of new homes in the US also slipped to -7.1% in March after February’s figures were much stronger than first reported, showing that the long-struggling housing market continues its uneven recovery.

    US Consumer Confidence decreases to 69.2 in April from 69.5 in March.

    The Fed will repeat in a statement today that subdued inflation and economic slack will result in exceptionally low interest rates through at least late 2014. The Fed will also release policy makers’ forecasts for growth, unemployment, inflation and the appropriate path of the federal funds rate over the next several years.

    EURUSD is currently trading around the 1.3210 level this morning, it touched a high of 1.3217 yesterday and a low of 1.3146.

    Greece’s central bank governor warned Tuesday that the country’s future inside the euro zone could again be placed in doubt if the next Greek government fails to implement the reforms the country has promised its international creditors.

    Finance Minister Wolfgang Schaeuble speaking yesterday afternoon defended Germany’s austerity policy against criticism from abroad, saying it was the way to generate sustainable growth. “The situation in Germany is that if you reduce the deficit, consequently you strengthen growth forces,” said Schaeuble.

    Irish business activity showed its strongest improvement in more than four years, but recovery for the troubled economy will take some time to take hold.

    Data released from Canada yesterday showed retail sales declined unexpectedly in February for the first time since July 2011, dragged by the sharpest drop in sales of new cars in seven months.

    Daniel Fountain / 24.04.2012

    Editor, Hotel Designs


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