Sterling rises to four and half year high ahead of Q1 GDP data

Tuesday, April 29, 2014

GBP posted steady gains against the dollar yesterday as market participants anticipate better than expected GDP data. The currency hit a four and a half year high yesterday, rising towards 1.6858 against the USD, rallying almost 1.3% since the start of the month and almost 2.2% since the start of the year. 

GBP rises to four and half year high against USD on growth optimism

GBP Curncy British Pound Spot 2014 04 29 08 22 52

US stocks bounced back on Monday as last week’s sell-off looks to have finally eased on renewed market optimism. The Dallas Fed manufacturing activity index exceeded expectations with an April reading coming in at 11.7 against the 6.0 expected by market participants. Markets gained further reassurance as hopes of increased merger and acquisition activity were reignited with headlines dominated by Pfizer’s proposed bid for AstraZeneca while GE and Siemens continued to battle it out in their respective bids for Alstom. The S&P 500 added 0.3% while the DJIA climbed half a percent higher but we remain cautious to further slides after an increase in the VIX above 14.00 towards the end of last week.

Dallas Fed manufacturing activity index posts surprise increase in April

DFEDGBA Index Dallas Fed Manufa 2014 04 29 08 07 19

Markets bounce back on Monday, but volatility concerns remain

SPX Index SP 500 Index SPVIX 2014 04 29 08 09 29

Spot gold prices snapped a three session rally yesterday, pulling back below the 200 day MA at $1,300 as prices struggled to gain momentum ahead of the monthly FOMC meeting and rates decision. Market participants expect the curtailment in bond buying to remain at $10bn this month, bringing QE down to an expected $45bn while rates are forecast to remain at 0.25%.

Three month LME aluminium prices shed 1.45% yesterday, dropping to a two week low on rising LME warehouse inventories. Stock levels have risen for the third straight session, reaching 5.348m tonnes yesterday after steady drawdowns throughout April which has put pressure on aluminium prices. Activity early this morning has seen levels drop towards $1,820/tonne.

Three month LME aluminium prices drop on rising warehouse inventories

NLSAH Index LME Cls Stck Prim A 2014 04 29 08 13 13


Events for today

JP Market Holiday

0930

UK

Q1

GDP

1000

EZ

Apr

Bus Climate & Con Sentiment

Topics: GDP, Gold, Aluminium, LME, GBP
More from: Kash Kamal