Cable falls to a fresh 2-1/2 year low on concerns of recession
The British pound fell to a fresh 2-1/2 year low versus the dollar Monday as sentiment on sterling remained weak amid concerns over the possibility of a triple-dip recession in U.K. and more easing by the Bank of England. Investors were looking ahead to U.K. data on industrial and manufacturing production on Tuesday after data earlier this month showed that the U.K. manufacturing sector contracted unexpectedly in February.
In earlier trade, although cable recovered after Friday's intra-day sharp selloff from 1.5047 to 1.4886 on dollar's broad-based rally due to robust U.S. jobs data and rose to 1.4945 in European morning, renewed weakness of sterling versus euro sparked off another round of selling in British pound and the pair tumbled to a fresh 2-1/2 year low at 1.4866 in European midday. Price later stabilised ahead of New York open and managed to climb back above 1.4900 level, then recovered to 1.4933 in New York afternoon.
The single currency edged higher from Friday's 4-1/2 month of 1.2955 versus dollar on Monday and rose from Australian low at 1.2980 to 1.3025 in European morning, however, euro was under pressure after release of a slew of weak data from eurozone countries and dropped to 1.2988 before climbing higher to 1.3054 in New York afternoon.
Official data showed on Monday that the German trade surplus narrowed in January as imports grew faster than exports, import rose 3.3% whilst export seasonally-adjusted terms in January reported an increase of 1.4% from December. French industrial production in January contracted by 1.2% month-on-month and fell 3.5% year-on-year basis compared to market median forecasts of -0.1% and -2.7% respectively. Manufacturing output decreased 1.4% in January, down 2.1% over the last three months and fell 4.6% compared to last year's level.
Versus the Japanese yen, dollar traded near its 3-1/2 year high at 96.60 set last Friday as the nominee for governor of the Bank of Japan, Haruhiko Kuroda, repeated his vow to ramp up monetary easing on Monday. USD/JPY pair moved narrowly inside 95.94-96.25 in Asia and Europe as focus was on other major currencies and then edged higher to 96.37 in New York afternoon in part due to renewed cross selling of yen.
Haruhiko Kuroda, a finance veteran and the government's choice to head the Bank of Japan, told a parliamentary confirmation hearing that under his stewardship the BoJ would move to meet a two-percent inflation target that policymakers adopted in January.
Data to be release on Tuesday includes :
Japan domestic CGPI, tertiary industry index and consumer confidence, U.K. RICS house prices, Australia NAB business condition and NAB business confidence, German CPI prelim., HICP prelim and WPI, U.K. industrial production, trade balance and manufacturing production on Tuesday.