Pound Slides As Stocks Slump On Global Growth Concerns

Pound Slides As Stocks Slump On Global Growth Concerns



The British sterling weakened on Tuesday as last week's disappointing non-farm payrolls data from the U.S. dragged the global equity markets lower and the Federal Reserve Chairman Ben Bernanke's comments on economy added further pressure on risk-sentiment.
The pace of the U.S. employment growth came in well below economist estimates, with the non-farm payroll employment increasing by just 120,000 jobs in March following an upwardly revised increase of 240,000 jobs in February. Economists had expected the addition of about 201,000 jobs.
In a speech at the Federal Reserve Bank of Atlanta Financial Markets Conference, in Stone Mountain, the Federal Reserve Chairman Ben Bernanke said that the economy is "far from recovering from credit crisis" and also noted that US economy is yet to fully recover from the impact of the global financial crisis.
Thus far, the U.K. FTSE 100 index fell 0.80 percent, France's CAC-40 index dropped to 1.25 percent and Germany's DAX slipped to 0.80 percent.
In economic news, a leading index of the British economy increased for the second consecutive month in February, data from a survey by Conference Board showed today.
The leading economic index increased to 102.6 in February from 101.6 in January. In December, the reading was 100.9. Five of the seven components made positive contributions to the index.
Meanwhile, the coincident economic index, which measures the current situation, remained unchanged for the second straight month at 102.3 in February.
House prices in the United Kingdom improved in March, according to survey results released by the Royal Institution of Chartered Surveyors (RICS). The RICS Home Price Balance for March was minus-10, compared to minus-13 in February.
The pound reached a 5-day low of 1.5811 against the dollar by 6:15 am ET, having depreciated almost 0.8 percent from Asian session's 1-week high of 1.5933. A move below the 1.5807 level could help the pair reach more than a 2-week low.
The sterling also eased to a multi-day low of 1.4553 against the Swiss franc from Asian session's 4-week high of 1.4607. The next support is seen at 1.4540.
Switzerland's unemployment rate remained unchanged at 3.1 percent after adjusting to seasonal variations in March, data released by the State Secretariat for Economic Affairs (SECO) showed today. The figure matched economists' forecast.
The British currency also fell to a 4-week low of 128.32 against the yen, down by 1.5 percent from Asian session's 4-day high of 130.27. The next support zone for the pair is seen at 127.40.
The Bank of Japan maintained its benchmark interest rate near zero and refrained from announcing additional stimulus amid signs that economic activity is gradually gathering pace.
Following the end of its two-day monetary policy meeting that ended today, the central bank's policy board decided to retain the benchmark uncollateralized overnight call rate at 0-0.1 percent as expected.
Against the European common currency, the British unit fell to a 5-day low of 0.8266 from an early morning high of 0.8236. The next hurdle for the pair is seen at 0.8280.
Eurozone investor confidence deteriorated for the first time in four months in April, results of a survey by the think tank Sentix showed today.
The confidence index came in at -14.7 in April compared to -8.2 in March and -11.1 in February. This was the first decline in the index since December 2011.
Moreover the outcome was worse than economists had forecast. Expectations were for a modest decline in the index to -9.1.
Meanwhile, Germany's merchandise trade surplus increased more than economists expected in February, data released by the Federal Statistical Office showed today.
The trade surplus increased to EUR 14.7 billion in February from EUR 11.9 billion a year earlier. Economists were looking for a trade surplus of EUR 12 billion. On a seasonally adjusted basis, the trade balance was a surplus of EUR 13.6 billion.
Exports of goods increased 8.6 percent year-on-year to EUR 91.3 billion in February. On a monthly basis, shipments advanced a seasonally and calendar adjusted 1.6 percent.
Looking ahead, the US wholesale inventories report and speeches by a number of Fed officials are expected to garner market attention in the upcoming New York session.


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