The British pound rose against the greenback for a second day and also versus euro on the back of robust U.K. manufacturing data (39.1 vs forecast of 35.0) with a report showing the rate of decline in manufacturing had eased more than expected last month and the record low interest rate in the U.K is probably beginning to have some positive impact on the economy.
The sterling’s intra-day rise versus the dollar accelerated to 1.4431 after the release of weak U.S. ADP employment data (-742,000 vs forecast of –660,000), however, investors booked profits after the better-than-expected U.S. home sales data (2.1% vs forecast of 0.0%) and ISM (manufacturing) index came out at 36.3 compared to 36.0 in the previous month. The British pound surged to as high as 1.4470 in late New York session. Stock markets ended higher for the second day, with the DJI ended up 153 points, NASDAQ up 23.01 points and S&P500 up 13.21 points.
Euro fell against the greenback after the release of eurozone unemployment rate which jumped to 8.5% from 8.3% from previous month and also the weaker-than-expected retail sales data. However, the euro was able to rebound on the back of poor U.S. ADP jobs data before retreating again ahead of the ECB's reduction of interest rates from 1.50% to 1.00% on Thursday.
The U.S. currency strengthened against Canadian dollar to as high as 1.2718 but the greenback fell briefly and sharply to 1.2575 after the Bank of Canada Governor Mark Carney said that the central bank will be able to quickly unwind stimulus once it becomes necessary. Carney also stated the Canadian government is in no danger of getting into excessive government debt due to the stimulus spending.
Earlier, the Japanese yen was under pressure versus the greenback and euro to 99.48 and 131.90 respectively on Wednesday after the release of the Tankan report. Large manufacturer’s sentiment posted its biggest fall ever and hit a record low at –58.
U.K. Nationwide house prices is due out at 06:00GMT on Thursday while G-20 summit will take place in London at 08:30GMT, at the same time U.K PMI construction will be released with economists expecting the index to remain unchanged at 27.8. ECB will announce its interest rate decision at 11:45GMT. U.S weekly jobless claims are likely to increase slightly to 653,000.