By Neil Dennis
Published: February 17 2010 11:40 | Last updated: February 17 2010 11:40
Trading on foreign exchanges suggested the first signs of caution were returning to global markets on Wednesday, with gains for the dollar indicating muted appetite for risk.
This was in contrast to equity markets, where further gains were made in response to strong banking sector results, leading some analysts to suggest that investors were cashing profits on recent trades against the dollar.
New Zealand’s dollar, having gained 3.5 per cent in the previous five sessions, eased 0.2 per cent to $0.7060. The Australian dollar, up 4.3 per cent during the same five sessions, was flat at $0.9020.
Japan’s yen, however, continued to fall, down 0.4 per cent versus the dollar to Y90.52, off 0.2 per cent to the euro at Y124.25 and 0.4 per cent lower against the Aussie dollar to Y81.56.
Sterling was on the back foot again after Tuesday’s strong gains, following data that indicated future rises in unemployment, despite the official jobless total falling for a second month.
Claimant count unemployment increased by 23,500 in January, wiping out the falls seen in November and December, and was the largest monthly increase since July.
Meanwhile, minutes from the Bank of England’s monetary policy committee meeting this month showed the likelihood of further quantitative easing was not such a distant prospect and that “for some members, the arguments were very finely balanced”.
Tullia Bucco at UniCredit said: ”This reinforces our view that the Bank’s future moves remain very much data-dependent, and we see no rate hikes before late this year.”
Vicky Redwood at Capital Economics said: “This is a clear message that QE is not necessarily over. At the very least the chances of a policy tightening this year look even more remote.”
The pound fell 0.2 per cent against the dollar to $1.5761, but remained higher against a weaker euro.
Eurozone trade figures showed an increasing surplus, but weaker-than-expected growth in exports cast a shadow over the data.
“Today’s increase was below expectations and suggests that sluggish trade growth is one of the factors why gross domestic product grew by only a modest 0.1 per cent in the final quarter of 2009,” said Jorg Radeke at the Centre for Economics and Business Research.
The euro fell 0.2 per cent against the pound to £0.8705 and was down 0.3 per cent versus the dollar to $1.3721.
