Foreign Exchange Report : Poor US Personal Spending Data Sends Share Markets Lower and Causes AUD, NZD and ZAR Weakness

August 3, 2011 - Written by John Cameron

STORY LINK Foreign Exchange Report : Poor US Personal Spending Data Sends Share Markets Lower and Causes AUD, NZD and ZAR Weakness

The Pound Euro exchange rate (GBP EUR) is 1.1453. The Pound Dollar exchange rate (GBP USD) is 1.6268. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5142.

Yesterday’s session in the currency markets was marked by the release of further data which suggested that the US economy is showing signs of weakening.

The US Personal Spending figures for June showed that US consumers had cut back on the expenditure for the first time in over twenty months. Analysts had expected the figure to match May’s number which showed growth of 0.1%, so there was general disappointment when the number printed at -0.2%.

The poor US Personal Spending numbers were the latest in a line of soft US data releases, following last week’s lower than anticipated Q2 GDP Growth number and weak Durable Goods Orders figure, which is seen as a leading indicator of the future prospects for growth in the States. US employment data has also pointed to a weakening in the real economy in the States over recent months.

Equities markets reacted badly to the US numbers, with the FTSE 100 closing down by almost 1% and Tokyo's Nikkei 225 index down by over 2% late in last night's Asian session. This downward movement in global appetite for risk has caused the markets to move against the high yielding currencies, with AUD, NZD and ZAR all showing significant weakness over the last twenty four hours.

Elsewhere, yesterday saw the release of some more encouraging data in UK with July's PMI Construction survey showing stable levels of growth in Britain's building sector. The Pound could garner further support later today if the latest PMI survey for the UK’s key Services sector is similarly positive.


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