Foreign Exchange Daily Market Update 29/09/11

The Pound finished yesterday slightly higher against the Euro, but a touch lower against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate which opened at 1.1472, moved up to close at 1.1486 following some very choppy price-action. The GBP/USD exchange rate which had shown gains over the past 3 days fell slightly from the morning’s open at 1.5648 to trade at 1.5645 by the end of the UK business day. There was no significant economic data released from the UK yesterday, which may explain the narrow overall change in the markets.

This morning has already sent the release of Augusts’ mortgage approval figures, along with net consumer credit numbers which showed that mortgage approvals increased from 49,600 to 52,400, and net consumer credit rose from 0.3 billion pounds to 0.5 billion pounds.

The Euro lost some ground against both the Pound and the US Dollar in the currency exchange market yesterday; the EUR/USD exchange rate falling from 1.3638, down to 1.3619 throughout the day. Yesterday saw the release of German CPI (inflation) figures for September, with the resulting numbers showing that price-growth increased annually, from 2.4% to 2.6%, and also month-on-month from 0.0% to 0.1%. This will not have been welcome news for the European Central Bank (ECB), who justified interest rate-hikes earlier in the year with the mandate of controlling inflation, but with levels rising still; it will pose a problem to the ECB.

Today has seen the release of German labour market figures, with the unemployment rate for September falling from 8.0% to 7.9%, and the unemployment change figures showing a move from -9,000 to -26,000. Later on this morning will see the release of Euro-zone consumer, economic and industrial confidence numbers, with the market forecast for a minimal change in all three indices; but any sharp changes could affect the Euro currency.

The US Dollar made a small pullback against the Euro and the Pound after 3 days of losses. This was despite very disappointing durable goods orders numbers for August, which showed a huge drop in the index reading, from 4.1% down to -0.1%. The US Dollar may have benefitted from the lack of agreement to a decision for refinancing in Europe, to aid the debt woes in Greece and other struggling nations, its status as a safe-haven currency helping it in times of market panic.

The US economic docket contains some very high-level data today, with the release of 2nd quarter GDP figures, along with personal consumption and pending home sales numbers. The market forecast is for an increase in US annualised growth, from 1.0% up to 1.2%, anything short of this could well put the Dollar under pressure, particularly with the Federal Reserve’s decision to direct $400 billion into bond purchasing to try and ensure economic stability and protect future growth.

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