Thursday 25 October 2012

Daily Foreign Exchnage Market Update

The Pound saw itself gain strength against both the Euro and the US Dollar in the foreign exchange market yesterday. The GBPEUR rate opened at a daily low of 1.2303, moving up to a daily high at midday to 1.2380 but then lost the momentum during the afternoon to close out at 1.2370. The GBPUSD rate opened down at 1.5950 and dropped over the first hour of the day to reach a daily low of 1.5950. During the rest of the day it gained some strength, peaking at 1.6048 mid-afternoon and closing slightly lower at 1.6014. There was no data released from the UK yesterday.

This morning saw UK third quarter GDP data being released with figure being much better than expected. The economy contracted during April and June of this year by 0.4% and analysts predicted that the economy would grow by 0.6% between July and September but the figure came out at 1%. Yearly GDP data was also released and the economy was expected to shrink by 0.5% but it stayed flat, not changing at all. The quarter on quarter result showed that Britain has finally left a recession with the best result for 5 years, pre-recession, with Olympic ticket sales and a higher demand for services the supposed reason. As soon as the figure was released this morning the Pound peaked sharply against the majority of currencies, especially against the Euro which shows today would be a good day to buy Euros.

The Euro lost strength against the Pound and the US Dollar during yesterday’s market session. The EURUSD rate opened at 1.2990 and plummeted to a daily low of 1.2921 just an hour after opening. It then picked up during the rest of the day, peaking early afternoon at 1.2983 and closing at 1.2945. Euro-zone PMI (Purchasing Managers Index) was released yesterday, a figure that rates the level of business conditions including employment, production, new orders and supplier deliveries. The figure came out at 45.8, lower then the previous result of 46.1, where a figure below 50 shows a contraction in business conditions. As well as this, Mario Draghi spoke at a closed-door meeting at the Bundestag, Berlin where he started by defending the ECB’s bond buying plan to ease Euro-zone debt. He stated that he expects the economy to remain weak in the short term, reflecting adjustments that many countries are undergoing in order to lay foundations for sustainable future prosperity. Although he believes the economy will be weak the overall felling of the speech was one of optimism as he kept repeating that the economy is moving in the right direction. Today is a very quiet day for the Euro-zone with no significant data being released.

The US Dollar weakened against the Pound but strengthened against the Euro in the foreign exchange market. The EURUSD rate opened at 1.2990 and followed a similar pattern to the GBPUSD rate, falling sharply early morning to reach a daily low of 1.2921. It then strengthened and peaked early afternoon at 1.2983 before closing slightly lower at 1.2945. No data came out of the US yesterday but today will see jobless claims, the number of people claiming for unemployment whilst actively seeking work; a figure that is highly correlated with labour market conditions. The previous result was 388K and the expected figure is set to fall to 370K. Durable goods figures will also be released today, an important figure as durable goods are expected to last longer than three years therefore they have to be worth the investment. The previous result was -13.2% but this result is set to be a positive figure, 7.5%.

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




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