Sterling feel good during the morning session, winning by a weak dollar and the euro in early sales, which helped him to reach 1.5925. Nevertheless, when the euro was restored during the day with a massive sell off in the end of the month, the sterling again rolled back to 1.57. As a result, EUR / GBP returned to 0.8675 this morning after being touched yesterday morning, 0.8560. For those who have positions in the pound, today's PMI survey will be key. Last month it recorded a significant decline, raising fears that the economy again slipped into recession. Nevertheless, other surveys of industry were more reliable.
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Statistics published by the Bank of England, showed that international investors have been consistent and strong buyers of British government debt securities (gilts) for the past six months. According to the data, the net average monthly purchase of gilts by foreign investors amounted to 8 billion pounds for the six months ending in August, at an annual rate of almost 100 billion pounds. One explanation for such a craving for shopping, in addition to relatively attractive interest rates, this is confirmation of the coalition of fiscal consolidation. Yield of 10-year gilts has fallen significantly this year from a peak of 4.27% in February to 2.95% now.
Yesterday did not start very well for the single currency. The downgrade of Spain, ads on Irish banks, fears of Portugal and a substantial sale of EUR / GBP put pressure on the euro. Nevertheless, during the day the pressure eased, helped by Asian purchases of securities by the end of the month, and the mighty German labor market data, which increased the euro to 1.3676. In September the euro grew by ten figures against the dollar, but it's pretty impressive. This morning, the weak German retail sales data did not change the situation, but usually it leads to substantial revision. Traders are back to the risk after the end of the month, while China and Hong Kong will come next week.
A whole bunch of data was published in the U.S. yesterday, and basically statistics were strong. Primary applications for unemployment benefits fell by 16,000 in the week ending Sept. 25, and extended bonuses and extra compensation to the unemployed fell to 292,000 in total. New York's PMI has been a fairly good level of 58,3%, showing growth of optimism in business circles in the region, while the Chicago PMI also surprised by the value of 60.4. GDP in the second quarter, revised up from 1,6% to 1,7% due to higher estimates of consumption and investment.
The Japanese Ministry of Finance confirmed that it made last month intervention in the forex 2125000000000. yen (about $ 25 billion) at the average exchange rate of 84.49. This value is very close to the one that was reported in the next few days after the intervention.