MARKET REPORT FRIDAY 20^TH JUNE 2008

Good Morning,

Sterling rallied versus the Euro yesterday to above 1.27 and against the Dollar to above 1.97 after a report showed that retail sales in May advanced by 3.5% from April, despite forecasts of a 0.1% drop. 

A statement from the Governor of the Bank of England, that policy makers won’t flinch in their fight against inflation also assisted Sterling ’s strength, providing speculation that policy makers will possibly raise interest rates over the coming months despite fears that a quarter or half point increase could propel the economy towards a recession.

The Dollar rallied slightly against the weakened Euro yesterday despite reports that manufacturing had contracted by more than anticipated in June as orders continued to weaken. This morning the trend was reversed with the Dollar losing ground as the Euro recovered to trade above 1.56 levels. Factories have been forced to cope with record high oil prices and a report yesterday showed that raw material expenses have surged to the highest level in nearly 28-years, which indicates that rising prices are hurting profits and causing job cuts.

Michael Ince

Archive News

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