Daily Foreign Exchange Market Update

Yesterday we saw the Pound gain against the Euro but fall in value against the US Dollar. The GBPEUR rate opened the day at 1.2290 and lost ground across the first half of the day, hitting a daily low of 1.2271 at midday; it then gained strength over the latter part of the day to close out at a daily high of 1.2318. The GBPUSD rate opened the day at a daily high of 1.6312 but then fell throughout the day before it closed out at a daily low of 1.6254. Yesterday Manufacturing PMI was released and came out at 51.4, higher than the predicted figure of 49.1 showing a level of expansion in the manufacturing sector. Today the only piece of information set to be released from the UK is the PMI results for the construction sector which is set to come out at 49.5, slightly lower than the previous figure of 49.3 but still below the 50 level.

Yesterday the Euro lost ground against the Pound and the US Dollar in the foreign exchange market with the EURUSD rate opening at 1.3273, hitting a daily high of 1.3291 just after the open and closing out the day at a daily low of 1.3195. German CPI for December was the only figure to come out of the Eurozone yesterday was the CPI figure which was slightly higher than expected, 2.1%. Today there will be no data from the Eurozone.

The US Dollar gained against both the Pound and the Euro in yesterday’s market session off the back of the news that the Congress agreed a deal to stop the large tax increases and spending cuts that were due to come into effect. Initial jobless claims will be released later today with the figure set to be 356K, higher than last weeks figure of 350K.

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

Daily Foreign Exchange Market Update

Last week in the foreign exchange market we saw the Pound lose strength against the Euro and the US Dollar. The GBPEUR rate opened the week at 1.2305 and lost ground across the first half of the week, hitting a weekly low of 1.2273 on Wednesday morning. It then gain strength over the latter half of the week, hitting a weekly high of 1.2429 on Friday morning before closing the week out at 1.2386. The GBPUSD rate opened the week at 1.6037 and peaked on Tuesday afternoon to a weekly high of 1.6131 before it dropped off and hit a weekly low of 1.6002 on Friday afternoon, closing the week out at 1.6030. The main news from the UK last week was that of the Bank of England’s MPC deciding to keep the base interest rate at 0.5% and the asset purchase programme at £375B. This week there will not be much data coming from the UK with the most significant being that of the jobless claims change, showing the amount of new people who are claiming unemployment benefits but still actively seeking work. The figure is set to fall from 10.1K to 5K, some good news for the UK labour market.

The Euro gained strength against the Pound but weakened against the US Dollar during last weeks market session. The EURUSD rate opened at 1.3032 and moved to a weekly high of 1.3126 Wednesday afternoon before it slipped to a weekly low of 1.2877 Friday afternoon, closing the week out at 1.2941. We saw Euro-zone retail sales come out much lower than expected, at -3.6% compared to the predicted figure of -0.8%, showing a lower amount of confidence from consumers in the economy. Euro-zone third quarter GDP came out in line with predictions at -0.1% and on Thursday the ECB decided to keep their base interest rate at 0.75%. This week we are set to see the German CPI (inflation) be released which is predicted to remain at 1.9% and later this week the Euro-zone CPI figure will also be released and set to stay at 1.5%. On Thursday the ECB will release their monthly report discussing various economic topics including information on the latest ECB meeting.

Last week we saw the US Dollar gain ground against both the Pound and the Euro in the foreign exchange market. The latter half of last week saw non-farm payrolls and the unemployment rate released, both showing good news for the labour market in the US. Non-farm payrolls increased by 145K compared to the predicted 85K increase and the unemployment rate fell from 7.9% to 7.7%. This week the Federal Open Market Committee (FOMC) decides on whether or not to keep the base rate at 0.25% with analysts predicting no change. On Friday US CPI (inflation) will be released with the figure set to fall from 2.2% to 1.9%.

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

Daily Foreign Exchange Market Update

Last week we saw the Pound lose ground overall against the Euro and the US Dollar in the foreign exchange market. The GBPEUR rate opened the week at 1.2355 and peaked Tuesday afternoon to a weekly high of 1.2406 but slipped across the second half of the week, hitting a weekly low of 1.2296 an hour before it closed the week out at 1.2406 on Friday. The GBPUSD rate did not see much overall change across the week, opening at 1.6027 and closing it out at 1.6026 however we saw it hit a weekly low of 1.5962 on Wednesday afternoon and peak to 1.6060 when the markets opened Friday morning.

The main news out of the UK last week was that of the new Governor of the Bank of England being announced as current Bank of Canada Governor, Mark Carney. It came as a surprise to the markets but many analysts believe that it is a safe choice due to the fact that Canada has not faced a banking crisis like the UK has. Earlier in the week the revised GDP figure was released and stayed at 1.0%. On Thursday the Financial Stability Report was released followed by a conference held by Mervyn King who announced that may need more capital to be used as protection against possible future losses.

This week PMI results are set to be released in the sectors, Manufacturing, Construction and Services. Thursday will see the Bank of England Monetary Policy Committee (MPC) decide on whether or not to keep the base rate and asset purchase programme the same. Both are set to stay as they are although many believe that the asset purchase programme may be increased soon from £375B.

The Euro gained against both the Pound and the US Dollar during last week’s market session with the EURUSD rate opening at 1.2972 and closing the week out at 1.3009. On Wednesday afternoon it hit a weekly low of 1.2880 and peaked at the open of trade on Friday at 1.3020. Last week we saw German CPI (inflation) come out at -0.1%, in line with predictions. Euro-zone unemployment rate was also released on Friday and came out as expected at 11.7%. This week we will see Spanish unemployment change be released on Tuesday. The previous result was the highest since February, 128.2K showing how much the financial crisis across the Euro-zone has affected the labour market. On Thursday the ECB will meet to decide on the base rate which is expected to remain at 0.75%.

The US Dollar weakened against both the Pound and the Euro during last week’s foreign exchange market session. US preliminary GDP was released last week, coming out higher than last year but lower than expected, at 2.7% showing an expansion in the US economy. Consumer confidence came out on Tuesday at 73.7, higher than the 73.1 predicted. Today manufacturing PMI will be released and is set to fall from 51.7 to 51.5. It is a big week for the labour market as non-farm unemployment change and the unemployment rate will be released later this week. Non-farm unemployment change is set to fall from 158K to 141K and the unemployment rate is set to stay at 7.9% on Friday.

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

Daily Foreign Exchange Market Update

During yesterday’s foreign exchange market session the Pound lost ground against the Euro and the US Dollar. The GBPEUR rate opened at 1.2387 and moved to a daily high of 1.2403 early morning before closing the day out at 1.2378. The GBPUSD rate opened the day at 1.6008 and quickly hit a daily high of 1.6018 an hour after the open. It then proceeded to fall during the morning before it hit a daily low of 1.5962 just after lunch, closing the day out at 1.5996. Yesterday we saw no data be released from the UK but today the Bank of England will release their Financial Stability Report which assesses the overall stability of the financial sector at the time of publishing. We may see a significant movement in the GBP against other currencies as analysts will be looking for clues as to future monetary policies. Once the report has been published the Governor of the Bank of England, Mervyn King will hold a conference to discuss the topics covered, however we may see the main topic of conversation be about the announcement of Mark Carney as the new Governor, taking over from King next year.

The Euro saw gains against the GBP but overall it remained unchanged against the US Dollar yesterday. The EURUSD rate opened at 1.2923 before shooting up to a daily high of 1.2938 minutes after the open of the European market. It then slipped throughout the rest of the day, hitting a daily low of 1.2880 mid-afternoon before closing the day out again at 1.2923. The main news from the Euro-zone yesterday was that of German CPI (inflation) being released which came out in line with predictions at 1.9%, the same result as what came out for November 2011, showing no change in the price of living in Germany. Today German unemployment change has already been released which was expected to come out at 16K however it was much lower than predicted, coming out at 5K, some positive news for the German labour market.

Yesterday the US Dollar gained some strength against the Pound and remained unchanged overall against the Euro in the foreign exchange market. The only significant data coming out of the US yesterday were new homes sales which were lower than expected, 368K compared to the 387K that analysts predicted. Later today US GDP will be released with the figure set to rise from 2.0% to 2.8% the highest result since February. Unemployment claims are also set to be released later with the figure set to fall from 410K to 404K; if both these results are as expected we may see the US Dollar gain strength against the Pound so it could possibly be a good day for selling Dollars.

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

Daily Foreign Exchange Market Update

In the foreign exchange market yesterday we saw the Pound strengthen against the Euro but weaken versus the US Dollar. The GBPEUR rate opened the day at 1.2348, a daily high, before peaking early afternoon to 1.2406 and closing the day out at 1.2385. The GBPUSD rate opened the day at 1.6043 and gained strength across the morning, peaking to 1.6057 just after lunch and closing out at a daily low of 1.6026. The only data from the UK yesterday was the revised GDP figure which stayed at 1.0%, as expected. Today there will be no data released from the UK.

The Euro weakened against the Pound and the US Dollar in yesterday’s market session. The EURUSD rate opened at a daily high of 1.2992 and lost ground across the first half of the day before it hit a daily low of 1.2916, closing the day out at 1.2939. There was no data released from the Euro-zone yesterday but today German CPI data will be released and is set to fall slightly from 2.0% to 1.9% showing a lower rate of inflation in the German economy.

The US Dollar saw losses against the Pound but strengthened against the Euro in the foreign exchange market yesterday. Durable goods orders were released yesterday and remained unchanged; they were expected to fall by 0.6% showing that there is still quite a relatively high level of confidence in the US economy. This was backed up by the fact consumer confidence came out a little higher than expected, at 73.7 compared to 73.1. Today will see new homes sales be released which are expected to fall from 389K to 387K.

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

Daily Foreign Exchange Market Update

During last week’s foreign exchange market session the Pound lost strength against the Euro and the US Dollar. The GBPEUR rate opened the week at 1.2507 and moved to a weekly high of 1.2546 on Tuesday morning before dropping to a weekly low of 1.2399 on Thursday afternoon, closing the week out at 1.2475. The GBPUSD rate opened at 1.5897 and moved to a weekly high of 1.5916 on Tuesday morning before dropping to a weekly low of 1.5825 on Thursday afternoon, closing the week out at 1.5867. It was a bad week for data release out of the UK as the majority of results came out worse than expected. Tuesday saw CPI (inflation) higher at 2.7% compared to the 2.3% predicted. The result was mainly blamed on higher tuition fees and food and non-alcoholic beverages which were the second largest contributor. The claimant count change showed an increase of 10.1K even though it was expected to fall by 0.5K, showing there was a much higher amount of people claiming unemployment benefits in the previous month. The final bit of significant data that came out was retail sales which fell by 0.8%. This week will not see much data be released, the most important piece being the release of the MPC meeting minutes which shows how many MPC committee members voted for a rate increase, decrease or hold.

The Euro gained strength against the Pound but lost ground against the US Dollar last week. The EURUSD rate opened the week at 1.2753 and hit a weekly low of 1.2660 on Tuesday morning before gaining strength and peaking at 1.2802 on Thursday afternoon before closing the week out at 1.2717. German economic sentiment came out worse than expected, -15.7 compared to the predicted level of -9.9 showing a low level of confidence in Germany. French and German GDP figures came out last week and both saw an increase of 0.2%, better than expected. French and German PMI are expected to come out this week; the French result is set to come out slightly higher than before at 44.1 and the German slightly lower at 45.9.

The US Dollar saw gains against both the Pound and the Euro in the foreign exchange market. US CPI was higher than expected coming out at 0.2% compared to the 0.1% predicted. Retail sales also fell by 0.3%. This week will see unemployment claims come out and are set to fall from 439K to 397K. The chairman of the Fed, Ben Bernanke is set to make a speech on Tuesday entitled ‘The Economic Recovery and Economic Policy’ at the Economic Club in New York. Existing home sales are also set to be released and are predicted to rise slightly from the previous month to 4.76M.

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

Daily Foreign Exchange Market Update

Yesterday in the foreign exchange market the Pound weakened against both the Euro and the US Dollar. The GBPEUR rate opened the day at 1.2507, a daily high before dropping to a daily low of 1.2468 just after lunch; it finally closed out at 1.2483. The GBPUSD rate opened at 1.5897 and hit a daily high of 1.5909 mid-morning, it then weakened throughout the rest of the day to close out at a daily low of 1.5869. There was no data released from the UK yesterday but today will see CPI (inflation) come out showing the change in prices of goods and services purchased by consumers. The previous month’s figure was 2.2% and today the figure is set to come out only slightly higher at 2.3%, further away from the headline inflation figure of 2%, set by the Bank of England.

The Euro gained some ground against the Pound and the US Dollar during yesterday’s market session. The EURUSD rate opened the day at 1.2709, falling quickly to reach a daily low of 1.2703; over the next two hours it gained strength to hit a daily high of 1.2726 before closing out the day slightly lower at 1.2712. Yesterday, Euro-Area ministers met in Brussels to discuss the situation in Greece and decided that they would give Greece two more years to meet its fiscal goals but are not expected to authorise more money. Today, German ZEW economic sentiment will be released showing the level of diffusion in the economy, a leading indicator of economic health. It surveys 275 German institutional investors and analysts and a total result of above 0 shows optimism, below 0 showing a pessimistic view on the economy. The result is expected to be -10.1, slightly better then last month’s result of -11.5 but still showing overall pessimism in the market.

The US Dollar gained against the Pound yesterday but weakened against the Euro in the foreign exchange market. Yesterday was a public holiday in the US so no data was released and today is a very quiet day on that front with no data being set to be released again.

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

Daily Foreign Exchange Market Update

Last week saw the Pound lose ground against the Euro and the US Dollar in the foreign exchange market. The GBPEUR rate opened the week at 1.2519, falling throughout the first half of the week before hitting a weekly low of 1.2453 on Wednesday morning. It then quickly gained ground to reach a weekly high on Thursday afternoon at 1.2561 before closing the week out slightly lower at 1.2514. The GBPUSD rate opened at a weekly high of 1.6013 before losing strength throughout the week and closing at a weekly low of 1.5906. Last week there were several pieces of data coming out of the UK, the most important being the Bank of England’s decision to keep the base rate and asset purchase target the same at 0.5% and £375B respectively. As well as this PMI for services was released which shows the level of business conditions in the services sector, it was worse than expected, coming out at 50.6 compared to the 52.0 predicted.

This week will see CPI (inflation) be released, showing the change in prices for retail goods, the Bank of England’s key measure on inflation and is expected to come out slightly higher than before at 2.4% Jobless claims will also be released showing the change in the number of people claiming unemployment-related benefits; the previous month’s figure was -4K and this month it is set to come out at -5.1K, a better result.

The Euro gained against the Pound but lost strength against the US Dollar during last week’s market session. The EURUSD rate opened the week at 1.2792 before moving to a weekly high of 1.2868 on Wednesday morning. It then weakened throughout the latter half of the week, dropping to a weekly low of 1.2689 on Friday afternoon, closing the week out slightly higher at 1.2715. Last week saw Spanish unemployment change be released, coming out at 128.2K, much higher then the 90.3K predicted, the highest since February, bad news for the Spanish job market. Mario Draghi spoke in a conference regarding the state of the Euro-zone economy. He stated that he expected inflation to fall below 2% in the next year even though unemployment is high and economic activity is week. He also said that the actions of the ECB should build confidence in the short term but only actions of the Government can build confidence in the long term. On Thursday it was announced that the ECB would keep their base interest rate at 0.75%.

This week will see most of the economic data come from Germany, with the German ZEW survey on economic sentiment, a good medium term forecast of the German economy being released on Tuesday, the result set to be -10, better then the previous result of -11.5. Thursday will see Germany release their third quarter GDP results, the figure set to be 0.1%, lower then the second quarter result of 0.3%. The Euro-zone third quarter GDP figure will also be released with the economy set to be seen to contract by 0.1% this quarter, slightly better then the second quarter where it contracted by 0.2%.

The US Dollar gained against both the Pound and the Euro in the foreign exchange market last week. Unemployment claims came out a lot better then expected, 355K compared to the 367K predicted, some good news for the US jobs market. The University of Michigan consumer confidence figure also came out higher then expected, 84.9 compared to 82.9, the highest figure we have seen since July 2007, very good news for the economy. The most significant figure coming out of the US this week is year on year CPI (inflation) which is set to fall slightly from 2.1% to 2%, not a great deal of change for inflation.

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

Daily Foreign Exchange Market Update

Yesterday in the foreign exchange market the Pound saw some gains against the Euro but a slight loss in strength against the US Dollar. The GBPEUR rate opened at 1.2519 before quickly dropping to a daily low of 1.2508 soon after the opening bell. It then gained some strength across the rest of the day and peaked just after lunch to 1.2561, closing the day out slightly lower at 1.2540. The GBPUSD rate opened the day at 1.5984, dropping mid-morning to a daily low of 1.5929 before gaining strength in the first hour of the afternoon, peaking to a daily high of 1.6005, closing the day out slightly lower at 1.5977. Yesterday the main news was that the Bank of England will keep the base rate at 0.5% and the asset purchase target at £375B, as expected by analysts as last month third quarter GDP came out at 1%. Today will be a quiet day with no data being released from the UK.

The Euro weakened against the US Dollar and the Pound during yesterday’s market session. The EURUSD rate opened at 1.2767, a daily high and lost ground during the first few hours of trading, dropping to 1.2719, closing slightly high at 1.2740. Like the UK the main data from the Euro-zone yesterday was the fact that the ECB decided to keep the main interest rate at 0.75%. Today will see various pieces of information being released, the main being German CPI (inflation) which is expected to remain at 2.0%, in line with previous results showing a steady rate of inflation in Germany.

The US Dollar gained some ground against the Pound and the Euro in the foreign exchange market yesterday. The most significant piece of data from the US yesterday were the unemployment claims which were better than expected, 355K compared to the predicted 367K showing a lower rate of people claiming unemployment insurance. Today will see the University of Michigan release their consumer sentiment results which assesses the confidence of consumers within the economy based on personal finance, business conditions and purchasing power. The figure is calculated by subtracting the percentage of unfavourable replies from the favourable ones and this month it is set to come out at 82.9, slightly higher then last months result of 82.6.

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

Daily Foreign Exchange Market Update

Last week in the foreign exchange market the Pound strengthened against the Euro but weakened against the US Dollar. The GBPEUR rate opened at 1.2449, falling during the first half of the week to a weekly low of 1.2382 on Wednesday morning before gaining strength across the latter half, peaking Friday morning to a weekly high of 1.2505, closing out slightly lower at 1.2477. The GBPUSD rate opened up at 1.6066 gaining strength throughout most of the week, peaking on Thursday morning to 1.6175 but then slipping down and closing out at a weekly low of 1.6027 on Friday afternoon. Last week the main piece of economic information released from the UK was PMI for manufacturing which is a gauge of manufacturing activity and future outlook. It was expected to fall slightly to 48.0 but actually came out a little lower than expected at 47.5. This week will see the Bank of England meet and decide on whether to change the asset purchasing programme and base rate or keep it the same at £375B and 0.5% respectively and analysts are expecting both to remain the same.

The Euro lost ground against both the Pound and the US Dollar during last week’s market session with the EURUSD rate opening at 1.2904, peaking Wednesday morning to 1.3021 but then closing out the week at a weekly low of 1.2845. Last week there were several pieces of significant data coming out of the Euro-zone including German CPI (inflation) which was higher than expected but the same as last month, 2.0%. German unemployment was also released and came stayed at 6.9%. The Spanish government released their budget last week which saw some improvement on the previous result but still a large deficit of -€46.11. This week will see the ECB meet and discuss the base rate decision which analysts predict to remain at 0.5%. Euro-zone PPI for September will be released early this week with the data set to come out slightly lower at 2.6% compared to the previous result of 2.7% showing a decreasing rate in the change in selling prices of goods.

The US Dollar gained strength against the Pound and the Euro last week in the foreign exchange market. The main data coming out was the unemployment rate which increased slightly from 7.8% to 7.9% and the change in non-farm payrolls which came out better then expected, increasing to 171K from 148K. This week is a very important week in US economics with Tuesday seeing Americans going to the polls to decide on who will be the next US President which will have some affect on the US Dollar.

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

Daily Foreign Exchange Market Update

Yesterday saw the Pound lose strength against the Euro and the US Dollar in the foreign exchange market, with the GBPUSD rate opening at a daily high of 1.6066 and falling throughout the day to close out at a daily low of 1.6020 at the end of trade. The GBPEUR rate opened at 1.2449, gaining strength before peaking at a daily high of 1.2453 around midday. It lost some ground throughout the rest of the day, dropping to a daily low of 1.2413 an hour before the end of trade where it closed out at 1.2423. There was not a lot of data coming from the UK yesterday, with mortgage approvals and change in net lending to individuals being the two most significant. An increase in mortgage approvals, 48.7K to 50K shows more confidence from lenders which can also be linked to the other data release, change in net lending to individuals, the amount of new credit issued to customers which hit a four year high. Augusts’ result was -0.3B and the predicted figure for September was 0.6B, however the actual result came out at 1.7B showing a much more confident outlook from lenders.

The Euro gained some ground against the Pound but lost some versus the US Dollar. The EURUSD rate opened up at 1.2904 remaining fairly unchanged throughout the day before fluctuating quite substantially several hours before the close of trade. It peaked at a daily high of 1.2924 and then dropped and closed out at a daily low of 1.2896 at the end of trade. Yesterday saw German CPI (inflation) being released with the figure coming out in line with the analysts expectations, 2.0%. As the headline figure for inflation, CPI tracks the change in price of a basket of goods bought by consumers and it reflects the purchasing power of the Euro in Germany. This morning saw German unemployment figures being released with the unemployment rate remaining unchanged at 6.9% but the unemployment changed being 20K, double the predicted figure of 10K which is bad news for the German labour market.

It was a good day for buying US Dollars as it gained against both the Pound and the Euro in the foreign exchange market. Yesterday US consumer expenditure was released, measuring a price change in consumer goods and services came out in line with the predictions of 1.7%. Like CPI results it is a good forecast of inflation but it differs from CPI as it only measures goods and services that are targeted towards and consumed by individuals. Today consumer confidence, data that assesses consumer sentiment on business conditions, employment and personal income will be released and it is set to rise from 70.3 to 73. Each month the Conference Board survey 5,000 people on their expectations on future economic conditions so an increase like predicted shows a greater level of confidence within the market by consumers.

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

Daily Foreign Exchange Market Update

Last week saw the Pound move significantly against the Euro and the US Dollar in the foreign exchange market due to the release of UK third quarter GDP results. The GBPEUR rate opened at 1.2281 on Monday morning, dropping to a weekly low of 1.2247 on Monday afternoon before gaining strength throughout the rest of the week. When GDP results were released on Thursday the GBPEUR rate spiked above the 1.24 mark. It carried on rising until it peaked to a weekly high of 1.2496 Friday afternoon, closing slightly lower at 1.2442. The GBPUSD rate opened at 1.6036 and fell for throughout the first two days of trading, closing out on Tuesday afternoon at a weekly low of 1.5913. On the release of UK GDP results the GBPUSD rate peaked to a weekly high of 1.6144 on Thursday afternoon, closing the week slightly lower at 1.6091. The main data from the UK last week was the third quarter GDP results which were better then expected, coming out at 1% compared to the predicted 0.6% the catalyst for the strength in the Pound. This week will be a quiet week for UK data release with mortgage approvals being the most significant piece being released, a figure that shows the amount of mortgages approved in September, with the figure set to be 48.7K, up from the previous months result of 47.7K, showing a greater deal of confidence from lenders.

The Euro lost strength against the Pound and the US Dollar during last week’s market session; the EURUSD rate opened at 1.3057 and peaked to a week high of 1.3083 at the close of trade on Monday. It lost strength throughout the rest of the week, reaching a weekly low of 1.2882 on Friday morning before closing the week out slightly higher at 1.2935. There was not that much data released from the Euro-zone last week, the major piece being Euro-zone PMI which came out below the 50 mark at 45.3 showing an expected decrease in business conditions. This week will see more significant data being released with the first piece being German CPI (inflation) year on year for October which is expected to be 2%, slightly lower then the previous inflation figure of 2.1%. German unemployment rate is also set to be released with the figure expected to come out slightly higher at 6.9%, from 6.8% last month.

The US Dollar lost ground against the Pound but gained against the Euro in the foreign exchange market last week. The major data release was the GDP figure that was higher then expected, 2% compared to 1.8% showing a heightened level of growth in the US economy. This week will be a fairly busy week for data release with personal consumption expenditure and consumer confidence both coming out later this week. Personal consumption expenditure is predicted to rise from 1.6% to 1.7% showing consumers are buying more goods, therefore have a greater level of confidence. Consumer confidence, which assesses consumer sentiment regarding business conditions, unemployment and personal income and is also set to increase from 70.30 to 73.0.

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

Daily Foreign Exchange Market Update

Last week saw the Pound weaken against the Euro in the foreign exchange market. The GBPEUR opened at 1.2406 quickly rising to a weekly high at the end of trade on Monday, to 1.2409. Throughout the rest of the week the Pound depreciated against it's Euro counterpart, hitting a weekly low on Friday morning at 1.2278, before closing the week slightly higher at 1.2409. The Pound also lost strength against the US Dollar last week with the GBPUSD opening the week at 1.6030, gaining strength over the first half of the week, peaking on Wednesday lunch time at 1.6178 before slipping lower over the remaining part of the week to close at a weekly low of 1.6003 Friday afternoon. There were a range of different results coming out of the UK last week; firstly CPI (inflation) for September was released and came out at 2.2% compared to 2.5% last September, showing the lowest rate of inflation for two years. Jobless claims and unemployment rates were released with a positive result for both. Jobless claims fell by 4K and unemployment rate fell from 8.1% to 7.9%, the lowest it has been for over a year. Growth in the economy is boosted by consumer confidence and retail sales saw a healthy increase for September compared to August, the month on month figure grew by 0.6% compared to -0.2% for August. The majority of data coming out of the UK in the last few weeks has been positive and now economists are expecting third quarter GDP data to show growth, in turn ending the UK’s nine month long recession. Some economists also believe that as inflation is close to the target rate of 2% and most data has been positive showing the UK economy may be fairing better than expected, the Bank of England may increase the amount in their Asset Purchase Program in November. From last months minutes we gleaned that policymakers were split on whether there was any need for additional QE in the future as the bank has already exhausted the allotment for this month.

The Euro strengthened against the Pound but strengthened against the US Dollar during last week’s market session. The EURUSD opened at a weekly low of 1.2920, gaining strength over the first half of the week to peak on Wednesday at 1.3137; it then closed lower on Friday at 1.3022. Last week the main data from the eurozone was the EU Summit where leaders decided to set up a single eurozone banking supervision meaning they are getting closer to a banking union which allows the central bank to intervene, if necessary, on any of the 6,000 banks in the eurozone. On Thursday Italy’s third largest lender Monte Paschi had its credit rating cut to junk by Moody’s and said it may need more state aid as it was the only Italian lender to fail the European Banking Authority’s stress test. Thursday also saw Spain sell off 3/4/10 year bonds with all the yields improving, falling a little across the day. It was also announced last week that there may be a general strike across the entire Iberian Peninsula, the first time ever, on November 14. Portugal has already called a general strike and Spain may decide to join them, with protests being held over austerity measures. This week will be very quiet for data release with the only significant piece being eurozone government debt/GDP ration which was previously 87.2%.

The US Dollar gained strength against the Pound but lost ground against the Euro during last week’s foreign exchange market session. The main data last week was CPI (inflation) which was slightly higher than expected, 2.0% compared to the prediction of 1.9%. This inflation figure shows stable growth in the US economy, add this to the retail sales figure which came out at 1.1% up from 0.8%, shows an improvement in the US. This week will see the FOMC rate decision which is expected to be kept at 0.25%. As well as this durable goods orders will be released, expected to be up by 6.8% compared to -13.2% last month. Durable goods are meant to last more than three years so they require large investments and usually reflect optimism as the expenditure must be worth while. Finally, more good news for the US economy as Friday will see third quarter GDP be released, it is also set to increase by 1.8% compared to 1.3% last quarter.

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

Daily Foreign Exchange Market Update

Yesterday saw the Pound gain some strength against the Euro and the US Dollar in the foreign exchange market. The GBPEUR opened at 1.2406 and fell to a day low of 1.2379 at noon before picking up during the second half of trading, closing at a day high of 1.2408. The GBPUSD opened at a day low of 1.6030 gaining ground throughout the day, peaking early morning at 1.6078 and closing only slightly lower at 1.6068. No data was released yesterday from the UK.

Today the main piece of information from the UK today is the CPI results that are expected to rise by 2.2% compared to 2.5% this time last year. CPI is always a key figure as it is the main measure for inflation, tracking changes in the price of a basket of goods.

The Euro lost ground against the Pound but gained some against the US Dollar in yesterday’s market session. The EURUSD opened at a day low of 1.2920, gaining strength in the morning before peaking at noon to reach 1.2979 – closing out lower at 1.2949. Yesterday the Commission president Jose Manuel Barroso spoke in Brussels and praised the EU’s international marketplace as the ‘cornerstone of European integration and sustainable growth’ and stated that he had seen a greater degree of openness in the council recently, showing greater confidence for the Euro-zone.

Today will also see CPI data coming out of the Euro-zone with the year-on-year figure for September set to increase by 2.7%, in line with the previous year’s result.

The US Dollar lost strength against both the Pound and the Euro yesterday on the back of advanced retail sales for September being released. This monthly measure of sales and goods at retail outlets is a significant market mover with more than 10% of all US economic activity being from retail sales. The figure increased by 1.1%, more then the analyst predictions of 0.8%.

The only significant piece of data coming out today is the CPI results, like the UK and Euro-zone, and is also expected to increase, by 1.9%, only slightly higher then the 1.7% increase last September.

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

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

Foreign Exchange Daily Market Update 09/09/11

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The Pound made a sharp reversal in the foreign exchange market yesterday; finishing the day trading higher against the US Dollar; and having made impressive gains against the Euro. The GBP/EUR exchange rate rocketed up from the morning’s open at 1.1322 to trade at 1.1487 by the end of the day. There was also a small rise in the GBP/USD exchange rate, from 1.5921 at the mornings open to 1.6009 at the day’s close. The main economic event from the UK yesterday saw the Bank of England keep the base interest rate on hold as expected; and also made no change to the asset purchase target. The market will have to wait for the release of the meeting’s minutes to see the full extent of the reasoning behind the decision; and the all-important voting majorities from the Monetary Policy Committee.

This morning has seen the release of producer price figures from the UK; with the result being an increase in the core output level, from 3.4% to 3.6%, some positive news for the UK.

The Euro suffered in the currency exchange market yesterday; falling heavily against both the Pound and the US Dollar; after less than impressive German trade balance figures; and more worryingly, a quite dovish tone from ECB President Jean-Claude Trichet at the ECB’s latest policy meeting; with the President highlighting the downside risks to economic growth, with the market now expecting the central bank to make rate-cuts by the end of the year.

The Euro-zone’s sole important figure for today has already been released this morning, with August’s CPI (inflation) figures form Germany showing an increase in both the annual and monthly level of price-growth; from 2.3% to 2.4% and from -0.1% to 0.0% respectively. This could pose a problem for the Euro-zone as a whole; with the expectation of rate-cuts in Europe increasing, rising inflation will be a difficult situation for the central bank to control.

The US Dollar for the fourth day running gained against the Euro; the EUR/USD rate pulling back further from 1.4061 to 1.5935; the Dollar taking advantage of the worsening outlook in Europe, but the currency lost some of its previous gains against the Pound, with the GBP/USD exchange rate picking back up to above 1.60. The economic data released from the US yesterday saw the US trade balance reduce it’s negative trade deficit slightly; which is positive news for the overall economy; but it may only be a temporary drop, with the previous day’s beige book economic report suggesting that the auto-industry; which is a huge contributor to the US’s economy, has been affected by smaller supply of stock from Japan, which could have been a factor in overall falling import levels.

There are no scheduled economic events from the US today; so the currency will be open to shifts in sentiment and news from the world’s other major economies.

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

Foreign Exchange Daily Market Update 16/08/11

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The Pound fell against the Euro but gained against the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate fell from the mornings open at 1.1385 down to 1.1337, whilst the GBP/USD exchange rate soared from 1.6292 at the market open to 1.6389 by the end of the day. There were no pieces of economic data released from the UK yesterday, with the market movements base don sentiment and news from the world’s other major economies.

This morning will see the release of CPI (inflation) figures from the UK, with the headline annual rate expected to rise annually from 4.2% to 4.3%, but month-on-month to hold at -0.1%. The core annual rate is expected to rise from 2.8% to 3.0%, and should the results follow the market forecast, it could well put pressure on the Bank of England to rethink their current stance on maintaining policy, as they expect inflation to fall naturally in the medium term; but a sustained rise would go against this outlook.

The Euro gained against both the Pound and the US Dollar yesterday; the EUR/USD rate rising throughout the day from 1.4309 to 1.4456 by the close. As with the UK, there were no key data releases from the Euro-zone yesterday, but with the market trying to predict the outcome of this morning’s German GDP figures and the news that the ECB was diverting around 14 billion Euros into purchasing Italian and Spanish securities to try and instil some strength back into European markets, the single-currency showed good gains.

This morning the Euro has come under some fierce pressure already this morning, with the release of 2nd quarter GDP figures from Germany showing that the economy regarded as the strongest in the Euro-zone showed a huge drop in economic growth. The annual n.s.a rate fell from 5.0% to 2.8%, with the annual w.d.a rate also falling from 4.7% to 2.7%, while the quarterly growth rate fell heavily from 1.3% to 0.1%. The quarterly growth rate was below that of Italy and France, and with the market expecting a quarterly gain of around 0.5%, European markets have fallen, and the currency has weakened slightly. Later on this morning will see the release of the composite Euro-zone GDP figures for the 2nd quarter; and following the disappointment of the German release, traders will watch the result of this closely with the currency exchange market primed for sharp movements should there be any further negative development.

The US Dollar fell against the Pound and the Euro yesterday, as the market still comes to terms with the nation’s credit rating cut, and the Federal Reserve indicating that they are adverse to any changes in the base interest rate until at least 2013. The main data release of note from the US yesterday was the net long-term TIC flows figure, which showed that the inflow of funds into US stocks and securities fell heavily, from the previous months level of $24.2 billion down to $3.7 billion, which could well be as a direct result of the nation’s credit rating cut; with investors looking to divert funds elsewhere.

Today will see the release of building permits, housing starts, and industrial production figures from the US. With the housing market still fairly weak, the currency may see small gains if the figures show a positive gain; whilst the market forecast is for industrial production to show a slight gain for the month, which may help the Dollar regain some it’s losses from yesterday.

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Foreign Exchange Daily Market Update 18/07/11

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The Pound gained impressively against the Euro and the US Dollar in the foreign exchange market last week. The GBP/EUR rate moved up from 1.1293 on Monday; to trade at 1.1412 by the close of business on Friday, the exchange rate hitting a high of 1.1429 on Tuesday. The GBP/USD exchange rate also showed gains across the week; from Monday’s open at 1.5970, the rate moved up to trade at 1.6145 by Friday’s close. The economic data from the UK during the week wasn’t overly positive though, with CPI (inflation) figures showing a drop in the level of inflation, both monthly and annually, which takes pressure off the Bank of England to look at raising the base-rate anytime soon, as elevated price-growth is easing of its own accord. The UK’s visible trade balance for May also increased its negative deficit, reinforcing the nation’s over-reliance on imported goods; the negative balance increasing from -£7,643,000 to -£8,478,000. The labour market is also showing little sign of improvement, with the unemployment rate remaining unchanged at 7.7%, along with the claimant count rate remaining at 4.7%. There was some negative news though, with jobless claims for June increasing from 22,500 to 24,500 amid expectations for a drop in the number of new claims.

The week ahead for the UK is not data-heavy, but will have some high-level market data. Wednesday will see the release of the Bank of England’s minutes form their last policy meeting. The market will be looking for any rhetoric from policy-makers in regards to future policy, and also the all important voting numbers will be studied, to see if any of the committee sees fit to either increase the asset purchase target, or a need to increase the base interest rate. Amid last weeks falling inflation figures, it seems increasingly unlikely that the central bank have any room to start tightening policy, with a rate-hike having the potential to destroy an already weak housing and labour market. Thursday will see the release of public sector net borrowing figures, with the foreign exchange market likely to show a deep interest in whether the UK government are keeping to their promise of reducing the UK’s debt level and evening up the balance sheet. However, any cuts must be made sensibly as not to effect overall economic growth in the UK.

The Euro weakened considerably against the Pound throughout last week, and also dropped massively against the US Dollar before recovering slightly by the end of the week. The EUR/USD rate opened on Monday at 1.4140, falling to 1.3845 on Tuesday before coming back steadily to trade at 1.4147 by Friday’s close. The currency was not helped by the fact that Greece’s credit rating was cut to ‘CCC’; the lowest level possible, and also European bank stress test results showing that 8 of 90 banks tested by the European Banking Authority conclusively failed the tests for required capital levels and exposure to sovereign debt. Economic data released throughout the week also showed that Euro-zone industrial production fell in June, from an annual rate of 5.3% down to 4.0. CPI (inflation) figures also showed no price growth in the annual or monthly rate, following a rate-hike by the ECB at their last policy meeting. With inflation seemingly under control, it does not bode well for the Euro-zone, as the European market will continue to face fierce pressure over the coming week.

The week ahead will see some high-level market data, starting on Tuesday with the German ZEW economic sentiment survey; with any negative downturn in this reading likely to put pressure on the currency. Wednesday will see the release of German producer price figures, along with Euro-zone consumer confidence, which has the potential to affect the market hugely. Thursday and Friday also have influential data set for release, with German and Euro-zone PMI figures set to cross the wires, along with German IFO readings for business climate, current assessment, and expectations, along with Euro-zone industrial new orders figures.

The US Dollar came under considerable pressure last week; with Congress still yet to agree on an increase to the US’s debt ceiling, which if unresolved could see the US default on debt repayments due for August 4th. This would have drastic consequences on the market, and potentially the US currency, with ratings agency’s confirming that they would cut the US’s credit rating should a default occur. The economic data released from the US last week painted a fairly mixed picture of the overall economy. Figures showed that the US’s negative trade balance increased, from -$43.6billion to -$50.2billion, along with PPI levels dropping, from 7.3% down to 7.0%. CPI (inflation) figures showed no increase in the annual rate of 3.6%. The Dollar was further pressured on Friday, with the highly-influential University of Michigan confidence survey showing a drastic drop, from the previous reading of 71.5, down to 63.8. This figure is considered to be a good early indicator of any economic downturn in the US, with the currency exchange market reacting accordingly upon release, with the Dollar weakening.

The US economic docket this week will mostly focus on the housing market. Tuesday will see housing starts figures released along with building permits figures for June. Wednesday will see existing home sales figures released, with the market forecast for a rapid increase in the level of sales, which would be positive news for the housing market and the overall economy. Thursday will see house price index figures for June released, along with the Philadelphia Fed Index which will give a good insight into the manufacturing sector in the US. A higher reading from the Philadelphia Fed index indicates a positive outlook for the manufacturing sector, contributing to overall economic growth, so could be beneficial for the currency.

Mike Hood
KBRFX

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Foreign Exchange Daily Market Update 12/07/11

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The Pound finished the day following the same pattern as much of last week; higher against the Euro and slightly lower against the US dollar in the foreign exchange market. The GBP/EUR exchange rate pushed up from the morning’s open at 1.1293 to trade at 1.1350 by the close, with the GBP/USD rate dropping from the morning’s level of 1.5970, down to 1.5925. This was again good news for people who are buying Euros, but not so good for those buying Dollars. There was no economic data of note released to influence movements, with the market taking direction from the ongoing unsolved debt issues in Europe.

Today will be a different story in terms of economic data though from the UK, with a lot of high-level releases. The early hours of the morning will see Nationwide consumer confidence figures released, which could have a bearing on the direction of the Pound, should we see any surprises to the negative, or the upside. The market will also focus on the release of CPI (inflation) figures, both annualised and monthly, with forecasts calling for no change. Also, retail price index figures are due to report, with analysts calling for a slight increase in the index, from 235.2 up to 235.8. Another piece of important data will be the UK’s visible trade balance, which is set to see a slight improvement in the negative surplus, indicating a boost for the UK’s export market.

The Euro continued to weaken against the Pound and the US Dollar, with the GBP/EUR rate falling from 1.4140 to 1.4029 from the market open to the close. The ongoing unsolved debt issues in Greece are not helping the currency, which despite the ECB hiking rates for the second time this year last week, is suffering because of uncertainty, and the increased possibility of default. Today saw some low-level market data from France, with Industrial and Manufacturing production figures showing impressive monthly growth, from -0.5% up to 2.0%, and 0.1 up to 1.5% respectively. The currency exchange market however, took little notice of this, and continued to show the negative attitude towards Europe’s current situation.

The European economic docket on Tuesday will see some important data from Germany. CPI (inflation) figures are set to show a slight drop in the harmonised level of growth, with the market predicting a slowdown in the annual rate from 2.4% to 2.3%, and no growth month-on-month, with the level set to hold at 0.0%. This would not be good news for the Euro, as it would show that the largest economy in the Euro-zone is showing a drop in prices, going against the ECB’s rhetoric that rate-hikes are necessary to combat inflation.

The US Dollar continued to strengthen in the foreign exchange market yesterday, benefiting from its safe-haven status by gaining against the Euro and The Pound. There were no significant data events released from the US to back up any positive movement, but the feeling among traders is that inflows to the currency during times of uncertainty particularly within the European market are benefiting the Dollar.

Today’s data may exert more influence on the currency market; with US trade balance figures set to show an increase in the negative surplus incurred by the US, from -43.7 billion dollars, to -44.0 billion dollars. This is not good news for the US economy as it shows an increasing over-reliance on imported goods, and that more funds for purchases are leaving the US than coming in. The Federal Reserve will also be releasing the minutes form their last policy meeting. The market will watch closely for any indications on future policy, and the Fed’s assessment of the current economic situation.

Mike Hood
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Foreign Exchange Daily Market Update 11/07/11

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The Pound finished last week much higher against the Euro but slightly lower against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate was quite low at Monday’s market open, trading at 1.1090, but moved up steadily over the week to close on Friday at 1.1246, actually hitting a high of 1.1280 during the mid-afternoon on Friday; a much-needed boost for people buying Euros. The GBP/USD rate opened at 1.6110 and fell to a low of 1.5935 on Friday morning, before picking up slightly to close the week at 1.6031.

The economic calendar provided a mixed picture for the UK last week. Monday saw the release of June’s PMI construction figure, which saw a downturn from 54.0 to 53.8. Tuesday was slightly more positive with June’s PMI services figure coming in above estimates, showing an improvement from 53.8 to 53.9. On Wednesday, the UK’s housing market received a welcome boost, with the Halifax house price report showing a monthly increase from 0.4% to 1.2%, and the 3 month-to-June figure showing an upward move from -4.2% to -3.5%. Thursday kicked off with Industrial and Manufacturing figures, which both showed upturns in the annualised and month-on-month levels, but the market was more focused on the Bank of England’s interest rate meeting. As expected the central bank kept the base rate and the asset purchase target on hold, with the market feeling that the MPC had little other option to do so, with an interest rate having the potential to destroy the UK mortgage market and make thousands of homeowners default, and any increase to the asset purchase target could start driving inflation higher. The week closed out on Friday with PPI input and output figures, with the annualised levels showing an increase from 16.1 % to 17% and from 5.4% to 5.7% respectively.

The week ahead for the UK is data-heavy; with the economic docket opening on Monday with RICS house price balance figures reporting. The forecast is for an improvement from -28% up to -25% which would be positive for the housing market. Tuesday will see the release of the Nationwide Consumer Confidence figure, with any drop or increase likely to create waves in the currency exchange market. The data continues on Tuesday with annualised and monthly consumer price index figures, along with retail price index and visible trade balance figures reporting. The Pound is likely to take direction from any increased positivity from these figures. Arguably, the most market-focused data of the week is on Wednesday, with the ILO unemployment rate expected to hold at 7.70%, jobless claims expected to fall, but the claimant count rate to show a slight percentage increase. The UK labour market is still quite fragile, and should there be any signs of weakness, the Pound could certainly suffer.

The Euro suffered badly in the foreign exchange market last week. As well as being hammered by the Pound, the EUR/USD rate also fell steadily across the week, dropping from 1.4525 on Monday’s open to close at 1.4254, hitting a low of 1.4204.

The European economic docket was overall fairly negative across the week. Monday saw a drop in Euro-zone PPI, the annual rate falling from 6.7 to 6.2%. Tuesday saw a similar pattern with Euro-zone PMI composite figures along with retail sales falling. The negative pattern continued through Wednesday, with German factory orders for May reporting a fall, from 2.9% down to 1.8%, and Thursday opening with German industrial production falling annually from 9.3% to 7.6%. The main focus of the week was the European Central Bank’s interest rate meeting on Thursday. As was almost certain, the ECB pressed on with their tightening of monetary policy, and raised the base rate to 1.5%, up from 1.25%, the second rate-hike this year. Traditionally a rate hike would see a currency appreciate; but whilst the raising of rates will help to counteract inflation – the ECB’s sole mandate, it could well prove damaging to European nations, businesses and consumers with any form of high-level or base-rate linked borrowing., and could stunt economic growth across the Euro-zone. The week finished with some positive news, in that the German trade balance continued to show an increased surplus, with the level increasing from 10.8 billion Euros to 14.0 billion Euros.

This week’s European data releases will see some high-level market data. Tuesday will see the release of German CPI figures, with the EU harmonised level set to fall from 2.4% to 2.3%, a result the ECB will take heart from as it may support their thinking that higher rates will bring inflation down. Wednesday will focus on Euro-zone industrial production figures, with the annualised rate set to fall from 5.3% to 4.8%, but the monthly figure to increase from 0.2% to 0.4%. The Euro currency is likely to see sharp movement depending on the tone of the ECB’s July report which will be released on Thursday, along with Euro-zone CPI (inflation) figures. If the ECB report contains any phrases pertinent to another rate-hike this year the currency could well weaken, as the market would view it as a bridge too far for the Euro-zone, and almost certainly damaging to economic growth across the European area.

The US Dollar managed to take advantage of the poor market reaction to the ECB’s rate-hike, and gained considerably against the Euro across the week, also pulling back slightly against the Pound before falling away on Friday afternoon following very disappointing Non-farm payroll figures.

The US market was closed on Monday, for the 4th of July celebrations, so Tuesday was the first sign of any economic data; with factory orders for May showing a slight increase, up from 0.8% to 0.9%. Wednesday’s main economic release was negative though, with ISM non-manufacturing figures reporting a downturn in activity, from 54.6 to 53.3, not supporting the US currency and economic outlook. Thursday was a slight glimmer of hope for the US, particularly the labour market, with the ADP employment change figure increasing drastically from 36,000 jobs to 157,000, smashing market forecasts of around 70,000. This helped the US Dollar hugely, with the figure indicating that the following day’s non-farm payroll data could also be equally as impressive. This was not to be the case though, with Friday’s headline figures showing that the US unemployment rate went up, to 9.2% from 9.1%, and the No-farm payroll figure disappointed hugely, recording a drop from 54,000 down to a mere 18,000. It was this huge miss on estimates that saw the Dollar lose its gains and the GBP/USD exchange rate push back up from 1.5935 to 1.6031 by the weeks close.

The US economic docket this week will kick-off on Tuesday with US trade balance figures; and with the market expecting the negative trade balance to increase, it will be an indication of the US’s increasing reliance on imported goods, and will not be positive for the currency. The Federal Reserve will also release the minutes from their last policy meeting on Tuesday; with the market watching closely for any signs of a rate-hike in the offing, and hoping for positive comment in terms of future growth prospects. Wednesday will see Fed Chairman Ben Bernanke present his semi-annual monetary policy report to Congress, with the currency market poised to take sharp movement from any negative rhetoric on the part of the Fed. It is almost certain that the issue of the US’s debt ceiling needing to be raised to guarantee future repayments will be brought up, as Bernanke may be pressed for comment on how a refusal/or approval from the IMF of the plan could affect policy. Thursday will see the release of advance retail sales figures for June, which is expected to show an upturn, along with PPI figures. Friday could have a huge bearing on the direction of the US Dollar, with CPI annual and monthly figures being released. Any increases in the overall inflation rate could put pressure on the Federal Reserve to start thinking about raising rates, and on the flip-side, a downward movement would dampen any rate-hike expectations, possibly weakening the currency. The final day of the week will also see the widely-respected University of Michigan confidence index report, with the market forecasting an upturn in the level; which could benefit the US Dollar. The Michigan confidence survey is seen as a very timely indicator, and a good early predictor of economic upturn or slowdown by the foreign exchange market.

Mike Hood
KBRFX

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Foreign Exchange Daily Market Update 17/05/11

Despite yesterday's lack of data the Pound managed to rebound from a low of 1.6158 against the US Dollar and to test levels of 1.6250, while at the same time the currency ended the day lower against the Euro at 1.1440 down from its early morning high of 1.1505.

Today, the UK's docket will focus on inflation. The headline figure, the Consumer Price Index (CPI) was expected to show that prices rose annually by 4.1% in April and that the core index was to hold steady at 3.2%. However inflation came in above these expectations with the core index reaching 3.7% and the total CPI reading hitting 4.5%. The Bank of England has repeatedly stressed that higher food and energy costs are temporary and will die down, but with the central bank forecasting that CPI will rise to 5% this year, an interest rate hike may well be on the way. The outcome will raise expectations that the MPC's last vote count will show at least 4 members voting for some form of a rate hike, but traders will have to wait until Wednesday for the release of the minutes to May's policy meeting.

The FX market seemed to have little reaction to yesterday's Euro-zone consumer price index which rose at an annualized rate of 2.8% April to meet expectations, with core price inflation coming in above the consensus with 1.6% growth. At the same time, the region's trade surplus was larger than expected with non-seasonally adjusted balance showing a surplus of €2.8 billion. The currency also remained stable in the face of IMF Managing Director Dominique Strauss-Kahn being arrested on sexual assault charges. Strauss-Kahn was scheduled to attend the EU Finance Minister's Summit being held in Brussels today, but Deputy MD Nemat Shafik has gone in his place. The summit had been called to discuss, among other things, the Greek bailout package, with finance ministers asking the nation to sell assets and deepen its spending cuts in order to win an extension of its aid package to €110 billion. Finance ministers also agreed to endorse Portugal's €78 billion bailout package, but the package still requires approval by all euro-area governments, and is expected to run over a 3-year period if approved. The EU Finance Ministers' summit continues for a second day today.

Looking at today's scant line up, economic confidence is expected to have fallen across Germany and the Euro-zone in the month of May, according to forecasts for the ZEW surveys. Economic analysts foresee the index slipping from 19.7 to 17.3 in the Euro-zone, while the German reading should fall to 4.5 from 7.6. As sentiment weakens in the Euro-zone, the outcome has the potential to weigh on the Euro exchange rate making it cheaper to buy Euros.

During a speech in Washington, the Fed Chairman Ben Bernanke suggested that the US government should fund research and development. The Chairman believed that this would boost economic growth in America, while also supporting science through education. Notably Bernanke refrained from commenting on the outlook for the economy or monetary policy. On the data front, the New York Fed's Empire manufacturing index showed that manufacturing activity grew at a slower pace compared to April, as the index fell from 21.70 to 11.90, missing expectations for 19.70 reading. This was then followed by a disappointing NAHB housing market index which held at 16, missing calls for a print of 17.

The week's first round of US housing market data makes an appearance today with building permits set to rise by 0.3% in April to an annualized rate of 587,000, with housing starts for the same period expected to pick up 3.5%. A small increase in building permits would highlight the weak state of the US housing market.