Foreign Exchange Daily Market Update 09/03/12

The Pound gained against the US Dollar but declined against the Euro in the foreign exchange market yesterday. The GBP/EUR exchange rate picked up from 1.1971 at the morning’s open to trade in a range of 1.1903 and 1.1984, before trading back to 1.1932 by the close of the UK business day. The GBP/USD exchange rate picked up from 1.5772 to trade up to the day’s high of 1.5832 before trading back to 1.5819 by the European market close. The Pound gained against the New Zealand Dollar and against the Australian Dollar in the foreign exchange market. The GBP/NZD exchange rate picked up from 1.9166 at the morning’s open to trade down towards 1.9191 by the close of the UK business day. The GBP/AUD exchange rate opened up from 1.4837 and finished the session higher at 1.4896.

Bank of England kept its Asset Purchasing Target for the month of March unchanged at £325bln yesterday and also left the Interest Rates unchanged at 0.5%. However today we have a fair bit of economic data from the UK, with Industrial Production, Manufacturing Production, Visible Trade Balance and Producer Price Index Output Core all due at 09:30 GMT.

The Euro gained against the Pound and against the US Dollar in the currency exchange market yesterday. The EUR/USD exchange opened up at 1.3173 to trade up to the day high of 1.3278 before closing out at 1.3256 by the European market close. Yesterday we had the French Trade Balance (Jan) which came in worse than expected at €-5324m vs. €-5150m, along with French Bank of France Business Sentiment (Feb) also coming in worse than expected at 95 vs. 96. The European Central Bank also kept its Interest Rates at 1.00%.

This morning we have seen the release of the German Consumer Price Index (Feb) year-on-year, which came in line with expectations at 2.3% and the month-on-month figure came in at 0.9% unchanged from the prior month. Also German Trade Balance increased slightly from the month of January to €13.1bln vs. €12.9bln previously.

There is no further economic data from the Euro-zone today.

The US Dollar declined against the Pound and against the Euro currencies yesterday. We had seen some mixed data from the US yesterday with the RBC Consumer Outlook Index increased from 45.1 to 47.5 for the month of March. However Initial Jobless Claims and Continuing Claims came in slightly worse than expected, with the Initial Claims increasing from 354k to 362k and the Continuing Claims increasing from 3406k to 3416k.

Today from the US we will keep a close eye on Non-farm payrolls and the Unemployment Rate at 13:30 GMT today, where economists are expecting 210k for Non-Farm payrolls and Unemployment Rate to be unchanged at 8.3%. We will also look out for the US Trade Balance and Wholesale Inventories due at 15:00 GMT.

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