Foreign Exchange Market Update 03/05/2012

The Pound declined against the US Dollar but managed to gain against the Euro yesterday in the foreign exchange market. The GBP/EUR exchange rate picked up from 1.2295 at the morning’s open to trade towards a new high of 1.2326, before trading back lower around 1.2309 by the close of the UK business day. The GBP/USD exchange rate picked up from 1.6199 to trade in a range between the low of 1.6159 and the high of 1.6228, before trading back around 1.6189 by the European market close. The Pound continued to gain against the Australian Dollar and the New Zealand Dollar in the foreign exchange market yesterday. The GBP/NZD exchange rate picked up from 1.9906 at the morning’s open to trade up towards 1.9989 by the close of the UK business day. The GBP/AUD exchange rate opened up from 1.5682 and finished the session higher at 1.5708.

Yesterday we had some positive economic data from the UK, with Mortgage Approvals (Mar) beating expectations at 49.9k vs. 48k and up from the prior month of 49k. Also Net Consumer Credit (Mar) showed improvement increasing from the prior month of £0.3bln to £0.4bln. However PMI Construction (Apr) was fairly mixed as we saw a beat on economists expectations of 55.8 vs. 54.0 but the overall figure was down from the prior month of 56.7.

This morning Nationwide House Prices missed expectations where economists were expecting an increase from -1.0% to 0.5% from the prior month, the data came in negative at -0.2%. Also missing expectations this morning PMI Services (Apr) declined from the prior month of 55.3 to 53.3.

There is no further economic data scheduled from the UK today.

The Euro declined against both the US dollar and the Pound in the currency exchange market yesterday. The EUR/USD exchange opened up at 1.3174 and traded towards the low of 1.3122, before trading back 1.3153 by the European market close.

Yesterday economic data from the Euro-zone was negative as German Unemployment Change unexpectedly increased for the month of April coming in at 19k vs. -10k expected by economists. German PMI Manufacturing (Apr) declined slightly from the prior month from 46.3 to 46.2.

This morning we will look out for the Euro-zone Producer Price Index due at 10:00 GMT, which is expected to decrease from 3.6% to 3.4% for the year-on-year figure and economists are expecting no change for the month-on-month figure at 0.6%. Also we have the European Central Bank Rate Decision due at 12:45 GMT where economists are expecting no change.

The US Dollar gained against the Pound and against the Euro currencies during the European session yesterday. Economic Data was mixed from the US with the ADP Employment Change (Apr) missing expectations coming in at 119k vs. 170k and down from the prior month of 201k. US Factory Orders however showed a slight improvement coming in at -1.5% vs. -1.6% expected by economists.

Today on the economic data front from the US we have the Initial and Continuing Jobless Claims due at 13:30 GMT, also followed by ISM Non-Manufacturing Composite due at 15:00 GMT.

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