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 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 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 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.

Foreign Exchange Daily Market Update 14/06/11

Monday's economic docket from the UK was extremely light; however this did not stop the Pound from making some headway against the US Dollar. The GBP/USD exchange rate picked up to a high of 1.6343 by 14:00 BST, making it cheaper for people who are buying Dollars; before heading back towards 1.63. The currency pair received a boost following the release of the Bank of England's (BoE) quarterly inflation report in which the central bank's Chief Economist Spencer Dale said that long-term inflation expectations remained stable. However Dale went onto say that shorter-term inflation expectations were more difficult to gauge and remain "a key area of concern".

May's inflation figures take precedence on the economic docket today, with the headline figure expected to post an annualised growth rate of 4.5% in May, unchanged from April's reading. The core index is expected to show a slight slowdown in price growth, at 3.5%, down from 3.7%. With inflation expected to remain unchanged from the previous month, the BoE is unlikely to face any further pressure to raise interest rates. Even if inflation grew at a faster than expected pace; a result that would usually see increased talk of an interest-rate hike to curb 'dangerous' levels of growth, the currency exchange market is unlikely to react as the BoE has already received support from the International Monetary Fund (IMF) for its choice of appropriate monetary policy, and the view that above-target inflation in the UK is temporary. With rate expectations falling, the Pound could face headwinds and subsequently trade lower against the other major currencies.

In light of on going sovereign debt fears, the Euro managed to end a three day decline against the US Dollar, much to the surprise of foreign exchange traders. The EUR/USD exchange rate managed to push through to 1.44 despite the European Central Bank (ECB) President Jean-Claude Trichet and German Finance minister Wolfgang Schaeuble being unable to agree on the role in which investors will play in the Greek bailout, with Schaeubles pushing for creditors to pay some of the cost, while Trichet believes this could be an enormous mistake. While the disagreement remains unresolved the IMF has threatened to withhold its share of Greece's original bailout package. Such an outcome would be hugely detrimental to Greece and could very well shake up the whole European economy. Adding salt to the wound, credit ratings agency Standard and Poor's lowered Greece's credit rating from B to CCC given the increase likelihood of the nation defaulting on its debt. While the Euro continued to be uninhibited by this news when it came to the US Dollar, the same wasn't true of the GBP/EUR exchange rate which hit 1.1362 at the open of the US session.

Today the European docket will be almost entirely empty of meaningful economic data, but that doesn't mean that the day will be uneventful. Given the threat that the IMF gave on withholding part of Greece's bailout package, European finance ministers have called for a special meeting to be held. If a compromise is reached then the Euro could well rally as the outlook for the region improves. However, failure to reach a suitable agreement could put serious pressure on the Euro, and make the currency exchange rate more favourable for buying Euros.

The three day rally that the market saw on the US Dollar at the end of last week came to a stop on Monday. A lack of meaningful data on the US docket meant left the currency open to risk sentiment, and consequentially the currency traded lower against the other majors as traders regained their appetite for risk. The Dollar made its greatest losses against the Japanese Yen and the Swiss Franc, while the US Dollar was down 0.19% against the Canadian Dollar during the Asian session as well as being down against the Australian and New Zealand Dollars.

This afternoon's session could see the Dollar extend its losses as May's advance retail sales are expected to contract by 0.5%, a sharp reversal compared to April's 0.5% increase. Further to this, interest rate hike expectations are likely to fall given that the month-on-month reading for the US Producer Price Index is expected to slow from 0.8% in April to 0.1% in May.

Foreign Exchange Daily Market Update 13/06/11

The British Pound had a tough time against the US Dollar over the course of last week. The currency slipped against the Dollar early in the week when the International Monetary Fund (IMF) lowered its growth forecasts growth forecasts for the UK in 2011 from 1.7% to 1.5%. However, the Fund did support the UK government's austerity measures; saying that it remains ‘’appropriate’’ for the Bank of England (BoE) to uphold the "current scale of monetary stimulus". The comment lowered rate hike expectations amongst foreign exchange traders, with the drop in expectation reinforced on Thursday when the BoE held the benchmark interest rate at the historic low of 0.50% and asset purchases at £200 billion. A negative outlook was reiterated for the Pound on Friday, when it was reported that both industrial and manufacturing production was down in April. Industrial production contracted by 1.7%, despite calls for output to remain flat, while manufacturing, which was expected to see a mere 0.1% decline fell by a staggering 1.5%. The data echoes the weaker Purchasing Manager's Index (PMI) readings seen earlier this month and paints a poor outlook for the UK economy. This left the GBP/USD exchange rate to close the week at a low of 1.6220.

This week; Consumer Price Index (CPI) figures for May are due for release on Tuesday, but with the BoE expected to maintain its current monetary policy for most of the year, a better than expected reading of 4.5% may not stoke an appreciation in the Pound. However there may be some optimists in the currency exchange market who may feel differently, so a move to the upside is still possible. Employment figures follow on Wednesday with the number of people seeking jobless benefits claims expected to rise by 6,500 in May, with the claimant count rate expected to hold at 4.60%. The ILO unemployment rate is expected to hold at 7.7%. Should the figures come in as expected, it doesn’t present a hugely encouraging result, but any surprises could spark a movement in the Pound. A slowdown in retail sales from April to May could see the Pound trading lower on Thursday, where it may remain lower against the other majors, as Friday's docket remains bare and therefore unlikely to support the Pound.

A mix of sovereign debt fears and poor economic data hurt the Euro's standing against the other major currencies last week. The Euro had started well with rate hike expectations rising on Monday morning when April's Producer Price Index (PPI) grew by 0.9% month-on-month ahead of a 0.8% forecast. The rally was quickly reversed though when German Finance Minister Wolfgang Schäuble expressed that it was not absolutely certain that Greece would receive further bailout funding. Tuesday's Euro-zone retail sales figures and Germany's factory orders both came in above the consensus reading for April, supporting the single currency until Wednesday; which proved a dire day in terms of sentiment for the Euro-zone. A contraction in Germany's exports for April, coupled with weaker industrial production weighed on the Euro, with further negative sentiment coming in the form of a Reuters article saying that the EU, IMF and ECB would not provide further aid unless Greece could resolve under-financing in its adjustment programme.

The Euro continued to slide despite ECB President Jean-Claude Trichet using the key phrase "strong vigilance", in his post rate decision conference on Thursday, to signal a strong likelihood that rates would rise in July. The phrase was used by the central bank's head following the ECB's decision to hold rates at 1.25%, in line with expectations. This would typically lift the Euro against the other currencies, however Trichet went on to say that further tightening measures would follow a rate hike in July and that the central bank has lowered its growth forecasts for 2012. The news kept the Euro under pressure so that by Friday the GBP/EUR exchange rate breached the 1.13 barrier, making conditions better for buying Euros.

European data will be on the thin side this week, with the first item of note being Wednesday’s release of industrial production for the Euro-zone. The data may push the exchange rate lower as forecasts call for production to contract by 0.2% in April. Thursday's Euro-zone CPI readings could allow the Euro to regain any potential losses if inflation comes in above the forecast 2.7% annual growth rate, while an improvement in the accompanying employment rate could see further gains. However the Euro looks set to end the week on a bad note as April's Euro-zone trade balance is expected to see a trade deficit of 1.9 billion Euros.

In what was an extremely quiet week for the US in terms of economic data, the US Dollar performed well. The Greenback benefited from a drop in rate hike expectations for both the UK and the Euro-zone, while Europe was further hampered by trying to resolve Greece's debt issues. A speech in Atlanta by Fed Chairman Ben Bernanke and Wednesday's Fed Beige Book report were the most significant events to take place on the US calendar. On Tuesday the Fed Chairman put fears over another round of quantitative easing to rest when he said he would maintain the current level of monetary stimulus until labour market conditions boost economic activity, but did see the need to expand the current stimulus package. Bernanke went onto say that the US economy was still growing, albeit at a slightly slower pace than previously, and his comments were backed up by the Fed's Beige Book stating that economic conditions "warrant exceptionally low levels for the federal funds rate for an extended period." Finally, on Friday, the Dollar ended the week on a high note when May's monthly budget statement reported a smaller than expected budget deficit, allowing the EUR/USD exchange rate to fall below 1.6350 as the Dollar rallied against the other majors.

This week’s US docket will start with Tuesday's PPI figures for May. Forecasts call for factory gate inflation to fall slightly from 2.8% to 2.6%, while the core index (without food and energy prices) is expected to remain at 2.1%; indicating that food and energy prices may be on the way down after being elevated for so long. Advance retail sales figures will accompany the PPI, but could push the Dollar lower as sales are set to contract in May.

Wednesday's CPI readings seem set to contradict the earlier PPI figure, as consumer inflation is set to rise from 3.2% to 3.4%, potentially bolstering the Dollar through rate hike expectations. Further to this June's Empire Manufacturing index and May's Industrial Production figure are expected to improve. Falling jobless claims and a rise in Housing starts could see the Dollar strengthen on Thursday, although the expected decline in Building Permits may cloud the picture. Lastly, Friday's University of Michigan confidence index could weaken the Dollar, as consumer sentiment is expected to fall in June, while May's Leading Indicators composite index is expected to improve by 0.3% and could potentially soften the Dollar's decline.

Foreign Exchange Daily Market Update 10/06/11

Yesterday the Bank of England announced their decision to hold interest rates at the historic low of 0.50%, and maintain the stock of asset purchases at £200 billion. Initially the rate decision had little effect on the currency, but as the market digested the increasingly unlikely prospect of an imminent rate hike, the Pound gave way and traded lower, with the GBP/USD exchange rate slipping to 1.6399. Market participants will have to wait until the 22nd June for the release of the meeting's minutes, which will also show the voting results, as once again the central bank refrained from releasing a policy statement. The Pound had seen gains earlier in the day with April’s visible trade balance reporting a better than expected reduction in the trade deficit, which shrunk from £7.708 billion to £7.389.


This morning’s industrial and manufacturing figures for April weakened the Pound’s standing against the other majors with the currency falling to 1.6265 against the Dollar and 1.1241against the Euro. Industrial production contracted by 1.7%, despite calls for output to remain flat, while manufacturing, which was expected to see a mere 0.1% decline fell by a staggering 1.5%. The data echoes the weaker Purchasing Manager’s Index readings seen earlier this month and paints a poor outlook for the UK economy. Also on the docket, Output Producer Prices came in as expected, with core inflation growing at 0.2% in May, down from 0.8% in the previous month. The slow down in price growth means that the Bank of England may retain their stance on monetary policy as the data supports their view that the current level of inflation is still a temporary factor that will die down eventually.

The Euro was down versus the US Dollar this Thursday despite the currency exchange market being given a signal by Jean-Claude Trichet that interest rates would increase in July. Following yesterday’s decision by the ECB to hold interest rates at 1.25%, ECB President Trichet used the term “strong vigilance” when referring to consumer prices, a key phrase that is usually followed by a rate hike at the next policy meeting. This would typically lift the Euro against the other currencies. However, Trichet went on to say that further tightening measures would follow a rate hike in July and that the central bank has lowered its growth forecasts for 2012. Trichet's comments sent the GBP/EUR exchange rate through the roof to peak at 1.1301 before falling back and holding near 1.1280 and maintaining a suitable environment to buy Euros.

With the ECB's head having signalled that a rate hike is on the cards for July, market trader's will be watchful for any economic indicators to support this move by the central bank and today's docket provides one such indicator: Germany's Consumer Price Index (CPI). CPI figures do have the potential to push up rate hike expectations, but unfortunately for the Euro, Germany’s CPI remained unchanged. Elsewhere on the docket, French industrial and manufacturing production for April came in weaker than expected. Industrial production actually contracted by 0.3% (although this is an improvement on March’s 1.1% contraction) and manufacturing increased by 0.2% missing estimates for 0.3% rise.

Thursday was a mixed bag for the US Dollar. Just before the open of the North American session the Dollar rallied following a greater than expected contraction in April's trade balance deficit which fell from a downwardly revised $46.8 billion to $43.7 billion, when forecasts had called for the deficit to widen to $48.8 Billion. This saw the Dollar rally and pushed the EUR/USD exchange rate to a low of 1.4478 and GBP/USD to 1.6358. The Dollar's rally was however restricted as initial jobless claims unexpectedly rose to 427,000 from 426,000. While it is only a small increase, it does however echo the rather poor employment figures that were released last week.

The big figure out this afternoon from the US will be May’s monthly budget statement which is expected to show that the budget deficit narrowed from April’s figure of $135.9 billion to $131.0 billion. The forecast outcome has the potential to push the Dollar higher as the data suggest that the US government is a step closer to balancing its spending against its income. However a higher than expected budget deficit would set the Dollar back.

Foreign Exchange Daily Market Update 06/06/11

Last week's data out from the UK was largely disappointing, which led the Pound to trade lower against the Euro. There was mixed price action versus the US Dollar across the week, as the US try to deal with their own economic problems. Wednesday's UK mortgage approvals for April showed that lending was still subdued, while the first of the Purchasing Manager's Index (PMI) triplet, the manufacturing PMI, under performed for May. The PMI for the services sector also came in below expectations on Friday, to show a slow down in activity since April. Only the construction sector out performed the consensus rising from 53.3 to 54.0.

This week's calendar is looking very light indeed, with nothing major to be reported until Thursday, when the Bank of England (BoE) will be announcing this month's interest rate decision. With this being the first month that the Monetary Policy Committee (MPC) will be voting without the renowned hawk Andrew Sentance, the chances of a further shift in sentiment towards a rate-hike seem less likely. April's trade balance deficit will also be reported on Thursday, with expectations calling for the deficit to have narrowed since March. Friday will see April's industrial and manufacturing production figures announced which are set to show a slow down in production and could potentially weaken the Pound's standing. Lastly May’s Producer Price Index will close the week’s data set and could push up rate hike expectations should the market see a large growth rate than the forecasted 3.40% increase in prices.

The foreign exchange market has witnessed the Euro continue to gather strength, despite ongoing issues of sovereign debt. The single-currency's upward movement started on Monday with news that Greece would undertake another round of austerity measures in a bid to secure funds from the International Monetary fund (IMF) and the EU. The news overshadowed Germany's disappointing decline in unemployment by 8,000 individuals, but the Euro's rally was short lived as by Thursday Moody's downgraded Greece's credit rating by three notches and raised its risk of default to 50%. By Friday though the Euro had recovered, in part due to an upward revision in May's Services PMI for Germany and the Euro-zone overall, but mostly due to some devastating figures from the US, which saw the currency end the week at 1.4430 against the Dollar and 1.12 versus the Pound.

In contrast to the UK docket, there are a number of key European figures to watch for this week, the most important of which being Wednesday's 1st quarter Gross Domestic Product (GDP) reading for the Euro-zone. The figure is expected to remain unchanged at 0.8% growth from the previous quarter. A larger than expected increase in GDP will extend the Euro’s gain while weaker growth will push the currency lower. Market traders will then look towards the ECB's interest rate decision on Thursday, which could remain unchanged at 1.25% given previous commentary from ECB President Jean-Claude Trichet that higher borrowing costs could jeopardise the recovery in weaker European peripheries. However Monday's Producer Price Index (PPI) could raise rate hike expectations if inflation comes in above the 6.6% consensus and in turn the currency could receive a boost. Keeping with inflation, Germany’s Consumer Price Index (CPI) figures on Friday could potentially contradict the ECB’s decision to hold rates (if that is the central bank’s decision) if inflation comes in above the expected 2.40% increase. This is a very real possibility given that Germany’s economic growth has placed increased pressure on price growth.

Economic figures out from the US generated a bearish trend for the US dollar. After a slow start to the week May's consumer confidence index was published on Tuesday showing a drop in consumer sentiment from 66.0 to 60.8. The downbeat news continued on Wednesday when payrolls processor ADP reported that in May the US economy added a mere 38,000 jobs massively missing estimates for 175,000 to be added. Further to this manufacturing activity slowed in May according the ISM manufacturing index which fell to 53.5 from 60.4. However the greatest blow to the US economy came on Friday when the Labour Department announced that Non-farm Payrolls came in well below the consensus of 165,000 jobs with an increase of 54,000. This left the Dollar trading at 1.6420 on Friday against the Pound, with further loses being made against the other safe havens; the Japanese Yen and the Swiss Franc, while against the Australian, New Zealand and Canadian Dollars the US Dollar managed to close the week relatively unchanged from its open.

Meaningful economic data from the US will be in short supply this week leaving traders waiting until Wednesday for the first significant event, the Fed's Beige Book report. Given the recent flurry of weak economic data, the beige book is unlikely to paint a rosy picture for the state of the US economy, so its release could potentially push the Dollar lower. The Dollar could face further woes when Thursday's trade balance sheet is released for April. Economists believe that the US trade deficit will widen to $48.8 billion from $48.2 billion.