Kerry Counsels Pyongyang Against Making A 'Huge Mistake' Sending GBP EUR Rate Higher & GBP USD Down

Modified: Friday, 12 April 2013 14:30 BST - Written by Tim Boyer

STORY LINK Kerry Counsels Pyongyang Against Making A 'Huge Mistake' Sending GBP EUR Rate Higher & GBP USD Down

A weak showing from this afternoon’s US Advance Retail Sales data for last month has added to the impression that America’s tentative economic recovery of the first three months of 2013 is stalling. Last Friday’s tame US Non-Farm Payrolls figure for March sowed the seeds of doubt in the minds of institutional investors, so when today’s US shop sales numbers printed at -0.4% versus analysts’ expectations of a 0.0% showing, market participants were tripping over themselves to adjust their positions on the Greenback.

The instant knee-jerk reaction from the global investment community saw the Buck well-supported following the release. This sent the Pound US Dollar exchange rate (currency: GBP USD) down towards the mid-1.5300s; the pair had spent the majority of the first half of the day trading above the 1.5400 level. This price action suggested that the market is not viewing the weak US data in terms of the effect which it may have on the likelihood of a scaling down of the Federal Reserve’s ongoing Quantitative Easing programme. The poor data published of the past week makes it unlikely that the Fed will cut back on its monthly QE purchases, which would ordinarily weaken the Greenback. The fact that the Dollar has firmed since the release suggests that market movement for the Buck is being determined by events elsewhere.

These events include an unusually forthright statement from US Secretary of State John Kerry earlier today. Kerry, speaking during his visit to the Far East, stated that any decision by North Korea to carry out further ballistic missile testing would be a ‘huge mistake’. The comment, which could be taken as a veiled threat by the secretive Pyongyang administration, has taken the edge off global appetite for risk on the day, sending stock markets and the GBP USD exchange rate lower. The euro, which is increasingly being viewed as a risk-sensitive currency, has also lost ground against the Pound and the US Dollar on the day, sending the Pound to euro exchange rate (currency : GBP EUR) up as high as 1.1775 earlier.

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TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts