The currency blog

Foreign exchange specialists

Data still mixed

We can all agree that the economic data releases at the moment are confusing. In the UK, the Nationwide survey last week showed UK house prices declining month on month by 0.9%, today the Halifax Survey reports house price increases of 0.2% from July. Positive consumer confidence figures were followed by disappointing PMI index figures, with the net result that traders have been left bewildered and slightly uncertain and the markets necessarily choppy. This mornings releases are no different, industrial production came in lower than forecast and manufacturing production exactly as predicted, but we saw an almost one cent move upwards in Sterling in the run up to the figures, and are in the midst of a retracement back to where we started. In today’s market it is getting more and more difficult to see the wood from the trees but we may now see calm until tomorrows Bank of England interest rate decision, at which no change to the base rate and asset purchase scheme are expected.

Conflicting data has also been a theme in the US, with the raft of negative data suddenly reversed with positive ISM & employment figures at the end of last week. What was becoming a clear picture of a slowing US economy and potential re-entry into recession was suddenly muddled slightly with the apparently positive figures. However, investors remain fearful of the stalling US recovery (and impending QE2) with traditional safe haven currencies like the Swiss Franc and Japanese Yen continuing to perform strongly. The Yen hit the highest level against the Dollar since 1995 yesterday, as the supposedly psychological key level of 84 was brushed aside easily. This afternoon sees Narayana Kocherlakota of the Federal Reserve speak, along with the release of their beige book & consumer credit statistics.

Euro worries have remerged (or should that be come back into the spotlight since I’m pretty sure nothing much has changed, except the fickleness of the markets) with the Op-ed in America on the total uselessness of the bank stress tests, and a unexpected drop in the growth of German Exports. Tomorrow sees German CPI realsed and on Friday a raft of EU wide industrial production.