Euro Recovers but Downtrend May Remain Intact (page 2 of 2)

Pound Sterling: Gear up for economic releases

The Sterling slipped against the Euro but remained unchanged against the US dollar as the lack of economic data left investors concentrating on election news.

The Labour Party suffered their worst defeat, as voters became hesitant about Gordon Brown's ability to lead the economy out of its current slump.

Brown blamed the current economic situation on the US credit crisis and deteriorating housing market, as he vowed to improve the general health of the economy.

On the economic front, there were no releases today, but the pace picks up tomorrow, as PMI services and Consumer Confidence figures are expected to decline, in light of the global credit crisis.

On the following day, Industrial Production and Manufacturing Production figures should slip further, which could lead the pound lower. BoE's rate decision on Thursday should set the tone for end of week's trading session, as it is largely anticipated that the central bank will keep rates steady.

Commodity currencies rise, RBA expected to leave rates unchanged

The Australian, New Zealand and Canadian dollars all gained strength against the greenback today amidst higher commodity prices.

Oil hit a record high above $120 a barrel, triggering a sharp rally in the Canadian dollar.

The IVEY PMI report is due for release tomorrow and even though the Canadian economy has seen some spillover effects from the US, the rise in leading indicators suggest that business sentiment could not be as bad as the market expects.

The Reserve Bank of Australia will be making a monetary policy decision tonight. Although they are expected to leave interest rates unchanged, the Australian dollar could see some volatility on the heels of the monetary policy statement.

Retail sales improved last week, but service sector PMI dropped into contractionary territory in the month of April, which could be worrisome for the RBA. Prior to the interest rate decision, the Australian trade balance report will be released.

Yen crosses mixed despite drop in the Dow

The Dow dropped 88 points today which weighed on some but not all of the Japanese Yen crosses. The US dollar, British pound and Swiss Franc weakened against the Yen but the Euro, Australian, New Zealand and Canadian dollars strengthened.

This divergent performance indicates relative fundamentals rather than risk appetite are the primary driver of market fluctuations. There are no major Japanese economic reports this week.