Forex Market Review (Asian Session) – Sterling tumbles to 5-week low versus yen after new UK election poll; kiwi jumps on NZ confidence data

Forex Market Review (Asian Session) – Sterling tumbles to 5-week low versus yen after new UK election poll; kiwi jumps on NZ confidence data

Sterling was one of the worst performing major currencies against the dollar as it slumped on election jitters. The aussie was briefly boosted by PMI data out of China. The kiwi jumped on business confidence data.

The pound fell half a percent against the greenback in early Asian session trading after a UK election poll showed the risk of a hung parliament. A poll conducted by YouGov showed the Conservative Party might lose as many as 20 of the 330 seats it currently holds, while the opposition Labour Party could gain nearly 30 seats after the June 8 elections. Cable slipped to as low as $1.2787. The pound tumbled to a five-week low against the yen, reaching 141.75 yen. Euro / pound jumped to 87.38 pence.

The euro was lower against a broadly stronger greenback, edging down to $1.1163. The dollar index opened higher today at 97.32 from yesterday’s close of 97.18. The dollar rose to 111.21 yen.

The Australian dollar briefly rose against the greenback and spiked up to a session high of $0.7475 on the back of manufacturing PMI data out of China, which showed it beat forecasts in May. The aussie was weighed down after Australian data showed private sector credit grew in line with expectations.

The official Chinese PMI data indicated stability in the world’s second largest economy, although a moderation in growth is expected in the months ahead. The manufacturing PMI index remained at 51.2 in May, compared to expectations for it to fall to 51.00. Non-manufacturing PMI rose to 54.5 from a prior 54.0, indicating that the Chinese consumer remains active.

Data out of Japan showed that industrial production growth picked up in April to its strongest level in almost three years, though not by as much as economists expected. The preliminary reading for April rose 4% month-on-month versus 4.3% expected but showed a rebound from the prior decline of 1.9%.

New Zealand data showed business confidence lifted in May according to the ANZ Business Confidence index which rose to 14.9 from April’s 11.11. The kiwi jumped against the US dollar on the news, hitting a high of $0.7117, the strongest level since March 3.

Looking to the rest of the day, focus will turn to Eurozone inflation data and GDP numbers out of Canada. The US will release pending home sales data.

Source: Trade Forex with XM.

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