Market News & Insights
25 September 2013

Concern Over U.S. Economy

EUR/USD 1.3488
GBP/USD 1.5999
GBP/EUR 1.1860 (0.8430)
EUR/CHF 1.2290
GBP/CHF 1.4578
GBP/AUD 1.7113

While the markets have been somewhat muted of late, yesterday saw two main US economic data releases by way of month on month house prices and consumer confidence. Since the FED shocked the markets with the news that they were leaving their bond purchases unchanged, it is now thought that the FED will now be looking more closely at data releases as it tries to determine when or if at all they will start the tapering process.

Yesterday saw month on month house prices fall short of analyst predictions from 12.5% expected to 12.4% actual. Next up was the US consumer confidence index, the Consumer price index fell slightly in August and decreased in September. The index now stands at 79.7 down from 81.8 in August. Uneven employment growth and limited pay increases may hold back consumer purchases which make up about 70 per-cent of the world’s largest economy. With many predicting that tapering would happen in September or October, the latest run of poor results is causing many to question if tapering could be completely put on hold for the foreseeable future.

While the Pound has enjoyed some decent gains versus both the US dollar and EUR, it seems to have run out of steam and stayed somewhat stagnant over the past couple of days. We suspect this is set to continue until Thursday when the national statics office is expected to confirm the UK growth this quarter. BOE policy members have been quick to play down the recent gains against both the USD and Euro, explaining that sustained growth is needed to remove slack from the economy and its misguided to think a sharper increase in interest rates is needed. Today sees only one UK data release worthy of mentioning, by way of CBI Retail sales due at 3pm.

Also, today we have two more key US data releases in the shape of Core durable goods at 1.30pm and new home sales at 3pm.