The currency blog

German retail sales for February have fallen 0.2% against the consensus of a rise of 0.2% this morning reinforcing the weak sentiment in Germany. Yesterday we saw unemployment levels rise to 8.6% as the powerhouse of Europe comes under real pressure- this will heighten the cause for more action from the ECB tomorrow.

Today, news from G20 participants will dominate although there is a raft of data from the US later the most interesting of which will be the ISM survey. The question that needs to be answered is, does a scenario of very easy monetary conditions translate quickly into an improvement in underlying confidence. I think that given what has gone before, this will not readily happen and that this type of statistic will disappoint for some time to come.

Overnight, the Japanese Tankan was released. The results were mixed but one has say, erred on the weaker side. Business sentiment for both manufacturing and non-manufacturing companies were marginally worse with large and small enterprises both anticipating conditions to deteriorate further during the coming 12-months. the Nikkei remained buoyed however by yesterday’s announcement of additional stimulus measures to be pushed through.

Today we are seeing movement on sterling- moving higher against the euro and the dollar and up against the Canadian dollar to 1.82. With added pressure on the ECB we could now see a break back to 1.10. The OECD, in its global progress report yesterday seemed to support the current mood for although they talk of the UK economy contracting by an eye-watering 3.7%, comparisons with other ‘top’ nations make us look performers - US -4%, Italy -4.3%, Germany -5.3% and Japan down a staggering 6.6%.

Discuss on this on the Currency Exchange Forum