It is yet another release from China that is getting all the plaudits this morning and pushing equities and riskier currencies onwards as Europe opens for the day’s trade. China showed a surprise USD880m deficit, as a result of a 14% increase in imports in March. How much of this is merely a bounce-back from the 15% slump courtesy of the Chinese New Year celebrations will remain to be seen, but exports also fell with trade between China and the EU down 1.9% through Q1. Total trade growth is still poor however, with last year seeing growth of only 6.2% vs the government’s target of 10%.

The main beneficiary of this announcement was the AUD with AUDUSD creeping above the 1.05 mark for the first time since mid-January as a result. Other ‘riskier’ currencies have also remained well bid through the Asian session with EURUSD hitting 5 week highs overnight.

Sterling was one of the stronger performers yesterday following some good factory output data that reduced the probability of a ‘treble-dip’ recession here in the UK. Output rose nicely following a couple of weather-affected months although is still 1.4% lower than a year before. A large proportion of the move higher was as a result of the 2.8% increase in quarrying and mining; a result of the resumption of flows from North Sea oil platforms that had been closed for renovation through the close of last year.

Trade data that came out at the same time was disappointing however, with falling exports and rising imports suggesting that the rebalancing that the UK economy needs is still a ways off. Sentiment on GBP is still broadly negative –  and this means that positive surprises on data will see larger moves higher than if data had been poor.

The mixture of news from the UK economy simply highlights the disappointing but not overly depressing nature of the state of the nation’s finances. The National Institute of Economic and Social Research forecast yesterday that UK Q1 GDP would come in at 0.1% – in line with our tracking.

News in Europe was thin on the ground yesterday away from a press conference that heightened investor concern over the Slovenian banking sector. Those who joined us for last week’s Bank of England webinar will have heard us talk about how Slovenia bears some resemblance to the issues seen in Cyprus, with a banking sector mired in a pool of non-performing loans that makes up some 20% of Slovenian GDP. The government says that they do not need a bailout; stop me if you’ve heard this one before.

Data from Europe this morning has also been euro supportive following a better than expected round of French industrial production numbers. The Italian version of these numbers are due at 9am. Other than that US Fed minutes will be the focus following the European close. These are likely to show that the ambition for further easing in the US is waning. However, the meeting did take place before last week’s horrendous jobs number and therefore is slightly damaged in its forward looking ability.

Have a great day.

 

View the latest exchange rates and live graphs here.

 

Indicative Rates

Sell

Buy

GBPEUR

1.1695

1.1717

GBPUSD

1.5329

1.5349

EURUSD

1.3095

1.3115

GBPJPY

152.11

152.35

GBPAUD

1.4573

1.4595

GBPNZD

1.7944

1.7969

GBPCAD

1.5554

1.5578

NZDUSD

0.8533

0.8553

GBPZAR

13.68

13.73

USDZAR

8.9284

8.9519

GBPPLN

4.8086

4.8321

EURJPY

129.97

130.19

Please note these rates are “interbank” rates i.e.   they indicate where the market is currently trading and are not indicative of   the rates offered by World First.  Rates are dependent on amount   transacted. It is important to remember that foreign exchange rates   fluctuate all the time. The rate you will receive will depend on the amount   and currency you require. Please call 0808 115 5821 or 020 3393   7836 for a live quote or login in to your World First Online account here.