Foreign Exchange Daily Market Update 22/03/12

The Pound had its first down day declining against the US Dollar yesterday, but managed to gain against the Euro in the foreign exchange market. The GBP/EUR exchange rate picked up from 1.1983 at the morning’s open to trade in an open range between the day low of 1.1941, and high of 1.2015 before trading back to 1.2004 by the close of the UK business day. The GBP/USD exchange rate picked up from 1.5913 the high of the day to trade down to the day’s low of 1.5817 before trading back towards 1.5851 by the European market close. On a further not the Pound continued its gains against both the Australian Dollar and the New Zealand Dollar in the foreign exchange market yesterday. The GBP/NZD exchange rate picked up from 1.9380 at the morning’s open to trade up towards 1.9453 by the close of the UK business day. The GBP/AUD exchange rate opened up from 1.5129 and finished the session slightly higher at 1.5173.

Yesterday we had the UK Budget presented to the Houses of Parliament; going over the main points briefly businesses will see corporation tax fall from 26% to 24% in April and the government wants to double its exports to £1 trillion this decade. As for personal taxes the income tax threshold will rise in April 2013 from £8,105 to £9,205 and the top tax rate of 50% will be cut to 45%. However we so no changes in the fuel duty in this year’s budget.

Today we will look out for the UK Retail Sales year-on-year (Feb) due at 09:30 GMT, where economists are expecting an increase from 1.9% to 2.3%.

The Euro declined against both the Pound the US Dollar in the currency exchange market yesterday. The EUR/USD exchange opened up at 1.3279 which was the days high to trader down to the low of the day at 1.3179, before trading back towards the 1.3203 level by the European market close.

Yesterday morning we had no significant data from the Euro-zone. This morning we have seen a decline in French Purchasing Manager Index from 50.0 to 47.6 and German Purchasing Manager Index for Manufacturing (Mar) from 50.2 to 48.1. Also we have just seen the release of the Euro-zone PMI Composite where economists were expecting a increase from 49.3 to 49.6, however the main figure came in at 48.7 missing expectations and lower from the prior month.

Later this morning we will look out for the 10:00 GMT Euro-zone Industrial New Orders year-on-year, where economists are expecting a further decrease from -1.7% to -3.1%.

The US Dollar managed to gain against the Pound and against the Euro currencies yesterday. Yesterday we had fairly negative data from the US yesterday, with MBA Mortgage Applications (Mar) declining further from -2.4% to -7.4% and US Existing Home Sales declining from $4.6mln to $4.59mln for the month of February.

Today we have some economic data from the US, firstly with the release of Initial and Continuing Jobless Claims at 12:30 GMT today, followed by Leading Indicators (Feb) due at 14:00 GMT.

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