Currencies Update 4th November 2013
The pound ended October on a low note after slipping against the dollar towards the end of the week when the US manufacturing sector enjoyed success. This was largely due to success in the USA, with the Chicago manufacturing purchasing managers’ index rocketing by more than ten points in October from the previous month, hitting a score of 65.9. This is rather impressive when it is considered that anything above 50 indicates growth. The story could have been worse for the pound, as without positive house price data to back it up, losses are likely to have been much more dramatic. However, house prices rose some 0.7 per cent, meaning that investors were reassured, and sterling received the support it needed.
While the dollar may have been up on the pound, a decision by the Federal Reserve saw it slip against the Yen and the euro. The Fed announced it would maintain its asset purchase scheme for the moment, causing the dollar to hit a session low of 98.28 against the yen. It then consolidated at 98.30, making for a fall of 0.22 per cent. As the Fed failed to give any hints as to when it would begin to wind in its $85 billion per month bond-buying programme, investors remain uncertain as to whether the slow down in the US economy due to the government shutdown will mean that measures are relaxed sooner or later.
The euro did not have a bad week, holding against the dollar on Wednesday (October 30th) at an exchange rate of $1.37. However, results against the dollar could have been better when faltering US consumer confidence data is taken into account. The euro has gained a total of seven cents since September on its US counterpart, however has been unable to breach the $1.3800 barrier due to lukewarm investor confidence.
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