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Forex Trading: London Market Wrap

Posted by Chris Advincula on May 1, 2013 7:17:00 AM

May 1 Wednesday 11:20 GMT

EURO

The euro made small gains to 1.3210 from 1.3160 (+50 points) against the lower dollar, in a very thin and subdued market in the absence of most participants in Asia and Europe being closed today for the Labor Day holiday. The dollar is slightly lower against the major currencies as most market participants await for the FOMC meeting results later today scheduled at 6:00pm GMT.

 

STERLING

Cable rose to an 11-week high to 1.5590 from 1.5526 (+64 points) versus the dollar after the better than expected U.K. manufacturing data.

The report raised speculation that the Bank of England may refrain from easing their monetary policy and the need to add more quantitative easing stimulus measures.

The gauge of factory output rose to 49.8 in April from 48.6 in March, as per the report of Markit and the Chartered Institute of Purchasing and Supply in London.

By comparison, the median estimate called for an increase of 48.5.  Unlike the U.S., China and the Eurozone, the UK PMI data was the only one that was moving upward.

 

DOLLAR

The dollar index declined 0.2 percent to 8.,589 at 10:34am in London after dropping to 81.569, the lowest level since February 28.

The Federal Reserve Bank is widely expected to maintain its monthly purchasing program of $85 billion in bonds to support an economic recovery that is nearly four years in the process. The Fed debate on monetary policy could begin to shift away from the prospect of reducing stimulus measures to possibly discussions of doing more QE, given the faltering economic growth and U.S. employment while inflation slows down.

The Federal Open Market Committee will release its statement today at 2:00 pm EST after its two-day policy meeting in Washington.

 

CHINA

China’s Purchasing Managers Index expanded at a weaker pace in April to 50.6 versus the median forecast of 50.7. The previous month of March was 50.9.

The data showed signs of slowing in the manufacturing sector of the second largest economy extending into the second quarter.

 

Chris Advincula

WorldWideMarkets 

 

euro.5.1 resized 600

 

GBP.5.1 resized 600

Charts: FXTrek.com

 

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