Foreign Exchange Daily Market Update 14/09/11

The Pound lost ground against the Euro, but made a small overall gain against the US Dollar in the foreign exchange market yesterday, following figures that showed rising inflation in the UK, and a wider trade balance; reiterating the nation’s huge reliance on imported goods, and lack of export activity. The GBP/EUR exchange rate fell from the mornings open at 1.1627 to trade at 1.1555 by the day’s close, with the GBP/USD exchange rate opening at 1.5794, and following some choppy trading finishing at 1.5802.

This morning has seen the release of some influential labour market data from the UK. The jobless claims change for August showed a decrease in the number; from 33,700 down to 20,300; a positive sign for the labour market, with the claimant count rate holding at 4.9% , and the overall ILO unemployment rate for the 3 months to July showing no change from levels of 7.9%.

The Euro managed to reverse some of last weeks losses against the US Dollar in the currency exchange market yesterday and also advanced against the Pound. There is likely to be some quite wide trading ranges with the European market facing some confusion over Greece’s current situation. The Greek Government have stated that they expect the nation to meet the first of it’s deficit targets to secure a further tranche of funding; but many market experts feel they will fall short. This has cast a cloud over the scenario, and following this morning’s downgrade of some French banks, there is a feeling that the Euro may suffer in the next few months.

The European economic docket only contains one piece of noteworthy data, with Euro-zone industrial production set to show a marked increase for July, which could see the Euro strengthen slightly. Any disappointment however could be detrimental to the currency, with some of the foremost European nations such as Germany relying heavily on their manufacturing sector.

The US Dollar finally showed some weakness in the market yesterday, making a small loss against the Pound and easing off just over a cent against the Euro. The EUR/USD exchange rate advanced from 1.3584 to 1.3674 throughout the day, following the Euro’s boost from the Greek government trying to appease the market with its positive rhetoric. Economic data from the US released yesterday showed a further drop in the US’s monthly budget statement, the figures for August revealing an increase in the negative balance from -90.5 billion dollars, to -134.2 billion dollars.

Today will see the release of advance retail sales figures from the US, along with the latest producer price index figures and business inventories. There is a fear that retail sales could show a marked decline, an indication of worsening consumer sentiment, combined with less money available in the economy. Should there be a severe drop in the levels, the Dollar could well weaken.

This Daily Market Update is brought to you by The Market Team @ KBRFX – Exchange Rates & Foreign Currency Transfer specialists.