The pound remained relatively flat versus the European single currency after retail sales report released this morning showed signs of improvement in UK retail sector. The headline gauge came out in line with expectations at 0.6%, following a –0.4% decline in November. However, the gain in consumer demand may not be maintained in coming months as UK unemployment rises and consumer confidence falls. Separately, Prime Minister David Cameron said yesterday that the UK lost faith in free market capitalism, amid growing sense that the burden of economic adjustment was being unfairly shouldered by the less well-off, and proposed creating an era of popular capitalism.
The euro declined against the dollar during the early morning session as Greek government and private creditors struggle to reach agreement on a debt swap plan. However, the single currency is still trading at a reasonably good levels after Spain and France successfully auctioned government debt yesterday, in their first bond sale since being downgraded by Standard & Poor’s last week. Expect for the single currency to remain volatile as Greek fiscal troubles continue to stir the markets.
The dollar consolidated against most of its rivals during the overnight trade after jobless claims last week dropped to the lowest level in almost four years, driving investors from dollar safety. Application for unemployment dropped to 50K from 352K in the week ended January 14, the best reading since April 2008. Although week to week reading tends to be volatile, the boost in jobless claims figures in recent weeks are clearly pointing to improvement in US job market sector. Looking ahead to today, Existing Home sales for December headline the economic calendar, with expectations for the figures to have increased by 5.2% to a 4.65 million annual rate.