GBPUSD reaches 1.60 for first time in 2012 and Euro bailout fund increased: will Netherlands need help soon?By james tweed • Apr 2nd, 2012 • Category: Currency
Tues 3rd April UK – PMI construction
US – Factory Orders
Wed 4th April UK – PMI services
US – Private sector payrolls
Thurs 5th April UK – Industrial Production, MPC Interest rate meeting
EU – German Industrial production
Fri 6th April US – Nonfarm Payrolls
UK – Bank Holiday
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Last week saw a lot of economic data releases from all sides of the global economy, and despite global recovery doubts and more downbeat forecasts, the last quarter seemed quite robust. Equity markets maintained a cautious tone as worries about the Eurozone fiscal outlook resurfaced. For those wondering whether the “risk-on” sentiment would continue through the following months there were worrying signals from the US, suggesting that talk of recovery there may have been overdone. This led to selling of the US Dollar and saw the British Pound US Dollar rate reach 1.60 for the first time in 2012.
US GDP, on an annualised basis, sat at 3%, plus 0.7% in the last quarter over the previous quarter. Durable goods orders improved by 2.2% in February, but house prices continued to fall, even though consumer confidence was the highest for a year. More Quantitive Easing is not off the cards as the Fed Chairman doubted if the non-farm pay roll improvements of recent months was enough to sustain the economy. He called for an expansive monetary policy to support the economy.
In Euro land they have increased the bailout fund to a trillion Euros in anticipation of greater support having to be provided. The Netherlands have joined the party of those countries in trouble. Eurozone unemployment edged higher in Feb to 10.8% – the highest levels since the Euro came into being in 1999.
In the UK the OECD announced that that the UK could well head back into recession in the first quarter of 2012 and that last years final quarter saw GDP contract by 0.3%. Household disposable income is at its lowest since 1977 as the financial year comes to a close. The interest rate isn’t expected to change on Thursday, and QE is expected to remain at £325 billion.