Foreign Exchange Daily Market Update 20/09/11

The Pound held a fairly narrow trading range against the Euro, but fell against the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate opened at 1.1494 and stayed pretty steady throughout the day, closing at 1.1491. The GBP/USD exchange rate however fell from the mornings open at 1.5729, starting its descent at around midday; leaving the rate down at 1.5679 by the day’s close. There was no significant economic data released from the UK yesterday, with rate movements based on shifts in risk sentiment and news from other major economies.

The UK economic docket today has no data of note set for release.

The Euro held steady against the Pound, and fell a touch against the US Dollar yesterday in the currency exchange market. The EUR/USD exchange rate ticked down across the day, from 1.3684 at the morning’s open, down to 1.3643 by the day’s close. Like the UK, there were no significant data releases from the Euro-zone yesterday.

This morning has already seen the release of German producer prices, with the resulting figures easing some pressure on the European Central Bank (ECB) in regards to price growth/inflation. Annually, producer prices fell from 5.8% to 5.5%, and month-on-month from 0.7% to -0.3%; which suggests that in line with the ECB’s predictions, inflation in the Euro-zone will fall in the medium-term. Later this morning we will see the release of the latest ZEW economic sentiment survey results for German and the Euro-zone, with the market forecast for an increased negative outlook, which in regards to Germany would hardly be surprising; with an increased public feeling in the country that far too much in terms of public funds is being diverted into failing nations such as Greece.

The US Dollar fells lightly against the Euro, but gained against the Pound yesterday. With no data releases from the US throughout Monday, the gain can be attributed to the Dollar beneficial status as a ‘safe-haven’ currency, and with news circulating that there is a possibility Greece may not receive it’s next round of funding from the International Monetary Fund, it may be that investors decided to shift funds into the US currency.

Today will see the release of August’s building permits and housing starts figures from the US, but with the market forecast for a drop in both numbers, the Dollar could come under pressure with confirmation that the housing market, particularly at base/new build level is still very weak; which also has a negative knock on effect to the construction and labour markets.

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