FOREX TRADING

Ahead of the BoE and ECB rate decision today, we see that the UK industrial and manufacturing productions beat estimates therefore supporting the fact that the expansion in the manufacturing sector is due to the higher production output.

Starting off with the industrial production in February, we saw that it rose to 1.0% from the revised prior reading of -0.5% from -0.4% which is better than the projected reading of 0.5%, while on the year it improved to -0.1% from the revised previous reading of -1.6% from -1.5%, while the markets were expecting a decline of 0.5 percent.

As the production from the manufacturing sector is recovering, this hints that production output is somewhat enhancing as industries are trying their hardest to shake off the worst global recession witnessed since post World War era. The higher production output indicates that demand levels are slightly inclining and this helping industries produce more.

Manufacturing production was also released in February, which left the negative territory of revised reading of -1.0% from -0.9% as it was released at 1.3% beating the estimated 0.6%. On the year the reading rose higher to 1.4% from the revised previous reading of 0.1% from 0.2%.

The monthly reading of factory production climbed twice as it was estimated which marked the most incline since 2008, as a result of the weak pound which increases demand on Britain’s goods, as exports become cheaper for overseas traders holding stronger currencies.

The pound has depreciated by nearly a quarter of its value according to trade weighted since the beginning of 2007.

Also the higher production from the manufacturing sector was a result of the worst cold weather since 1979 easing, as some factories production was negatively effected by the cold snap.

Next on our calendars are retail sales from the euro zone for February which tumbled to -0.6% from the revised prior reading of -0.2% from -0.3% while on the year declined to -1.1% from the revised previous reading of -0.6% from -1.3%.

The decline in retail sales gives us evidence that the high unemployment rates of 10.0% are still heavily weighing on spending levels therefore hurting retailers’ profits. Spending is a major factor in the business cycle which will continue to decline as the labor sector remains fragile.

Despite the higher consumer confidence levels, consumers spending are also pared from the weather cold which as mentioned earlier, caused consumers to stay indoors.

Yesterday, we witnessed the fourth quarter GDP final reading for the euro zone to stagnate which supports the fact that the outlook is negatively affected from the widened deficits around Europe and the rising unemployment rates.

Later today, as stated that both the BoE and ECB will announce interest rates in which expectations indicate that both central banks are going to leave them steady at 0.50% and 1.00%, while the BoE will resume pausing stimulus and ECB continues to plan exiting measures.

Ecpulse

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