Sterling suffering losses on falling UK retail sales
The British pound suffered losses from disappointing economic data. Retail sales in May fell by 0.6% as compared to that of the last month and by 1.6% against the analogical period of the previous year, as in April UK retail sales rose by 0.9% in comparison to the last month. Economists awaited that retail sales in May would grow by 0.6% versus the last month. At the same time net borrowing by the government sector hit the historical high that gave occasion for pound-selling.
The US dollar is traded on Thursday upwards, so investors' attitude to risk was changed again for the worse. Decision of world-famous rating company Standard & Poor's to cut ratings on 22 American banks negatively affected the sentiment of stock market that led to falling of stock indexes. The falling started in Wall Street on Wednesday and continued during the Asian session and the European session on Thursday. At the same time reducing inflation indexes are holding the dollar from considerable strength. Consumer Price Index (CPI) rose by 0.1% as compared to that of the last month, but not by 0.3% as market expected that practically reduced to zero chances for early tightening of monetary-credit policy in the U.S.
The Swiss franc sharply extended gains on the announcement from the Swiss National Bank that the Swissie was not at the level to undertake intervention, aimed to prevent from franc-strengthening. On the market its opinion has occurred that the level at 1.50 should be the threshold level for euro/franc. This level has not been yet breached since March when the Swiss Central bank carried out currency intervention. In the interview one of central bank governing council members said that the market should not get into the habit of the certain level for intervention so the Swiss National bank would make decision based on a concrete situation. These announcements provoked franc strength soon. The Swiss Central bank has actively prevented from strengthen of its national currency in order to help Swiss exporters keep their competitiveness.
