Daily Foreign Exchange Market Update

Last week in the foreign exchange market we saw the Pound finally gain some strength against the Euro and the US Dollar. The GBPEUR rate opened the week at 1.1483 and dropped to a weekly low of 1.1371 mid-week before it strengthened over the back end of the week, hitting 1.1624 before closing out the week at 1.1583. The GBPUSD rate opened the week at 1.4936 and like the previous rate it hit a weekly low of 1.4831 mid-week before closing out the week at 1.5131. It was a quiet week for data release from the UK with the main piece of data being industrial and manufacturing production which both fell by 2.9% and 3.0% respectively.

The US Dollar also weakened against the Euro last week with the EURUSD rate opening at 1.3008 and closing out at 1.3059. The main news from the Eurozone last week was their CPI (inflation) result which increased by 1.8% as expected. US retail sales came out of the US last week better than expected at 1.1%. The US CPI data also was released with the figure coming out slightly higher than expected at 2.0%.

Over the weekend we had some significant news come out of Cyprus where, due to an EU bailout deal, bank customers have to pay a levy of up to 9.9% on their savings. Savers with up to €100K in their bank will be charged a one-off amount of 9.9% of the amount in their account and those with under €100K will see a 6.7% charge implemented; this deal is expected to raise nearly €6Bn for Cyprus.

This week is an important week for the UK as the Chancellor, George Osborne will present the 2013 Budget to Parliament on Wednesday. We will also see UK jobless claims change and the unemployment rate be released with the rate for the 3 months up to January expected to remain at 7.8%.

On Wednesday the FED’s FOMC will also meet and decide whether or not they want to change their base interest rate with no change expected; staying at 0.25%.

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

Yesterday the Pound saw gains against the Euro but losses against the US Dollar in the foreign exchange market. The GBPEUR rate opened at a daily low of 1.2280 but hit a daily high of 1.2328 at midday before closing the day out at 1.2312. The GBPUSD rate opened at 1.6107 and hit a daily high of 1.6114 at midday; it then slipped to a daily low an hour after at 1.6082 before closing the day out at 1.6101. Yesterday we saw UK PMI services come out lower than expected at 50.2 compared to the 51 predicted, showing a lower rate of expansion in the services sector. Today we will see the Bank of England Monetary Policy Committee (MPC) decide on the base interest rate and asset purchase programme amount with both expected to remain at 0.5% and £375B respectively.

The Euro saw losses against the Pound and the US Dollar during yesterday’s market session with the EURUSD rate opening at a daily high of 1.3117. It weakened across the morning before it hit a daily low of 1.3060 early afternoon before it closed out at 1.3076. Euro-zone retail sales were released yesterday with the figure for October coming out much lower than expected at -3.6% compared to the predicted figure of -0.8%. The month on month figure also came out lower than expected, at -1.2%, the lowest rate we have seen since June 2010. Today, the main news from the Euro-zone will be the ECB’s decision on whether or not to change the base interest rate from the current level of 0.75% with analysts predicting no change will come.

The US Dollar saw gains against the Pound and the Euro in the foreign exchange market yesterday even though non-farming employment change came out lower than expected at 118K compared to the predicted 129K, the lowest since last October. Today unemployment claims will be released, the number of individuals claiming for unemployment insurance for the first time in the past week, with the figure set to fall from 393K to 382K.

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

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

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

Thursday saw the Pound stay unchanged against the Euro, opening and closing at 1.2315, peaking early morning to 1.2330 and dipping to a day low of 1.2304 around noon. The Pound however lost strength against the US Dollar yesterday with the GBPEUR rate opening at 1.6142, falling to a day low early morning to 1.6116. It peaked at midday to 1.6171 and fell throughout the rest of the day to close out at 1.6138. Yesterday saw retail sales being released from the UK with positive results coming out. In September sales in creased by 0.6%, much better then August results which fell by 0.1%. Clothing and footwear sales were up by 2%, showing solid growth from the UK in Q3.

Today will see UK Public Finances, the amount of money financed to the government, being released. The previous figure was a deficit, –9.6B, which is unfavourable and can be bearish for the Pound. The figure for September is set to come out at 4.7B, a more positive result.

The Euro was unchanged against the Pound and lost ground against the US Dollar in the foreign exchange market yesterday. The EURUSD opened at 1.3107, climbing mid-morning to 1.3129 before falling for the rest of the day – reaching a day low of 1.3078, closing slightly higher at 1.3098. Yesterday the main news was from the EU Summit where the leaders have agreed 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. There was some news out of Italy with its third largest lender having its credit rating cut to junk (Baa3 to Baa2) by Moody’s. Today will see German Producer Prices being released which are set to rise by 1.6%, same as last years result, showing an increase in the prices paid by domestic producers for goods.

The US Dollar gained strength against both the Pound and the Euro during yesterday’s market session even though US initial jobless claims came out a lot higher then expected, 388K compared to 365K. Today there will be no data coming out of the US.

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 09/10/12

Yesterday saw the Pound weaken against the Euro and the Dollar in the foreign exchange market. The GBPEUR opened at 1.2389, a day high but fell throughout the day to close at a low of 1.2354. The GBPUSD rate followed a similar pattern with it opening at 1.6093 and slipping down to 1.6031 by the close of trade. Yesterday saw no information coming out of the UK.

Today will be a busy day however for UK data release, with some information having already been released such as the RICS house price balance for September which rose from the previous result of -18% to -15% showing surveyors are still reporting a loss but at an increasing rate. BRC sale, like-for-like, have also been released this morning with the result increasing by 1.5% even though the expected result was set to decrease by 0.2%. Industrial and manufacturing productions have been released and both came out with worse results than previous months, -1.1% and -0.7% respectively. NIESR GDP estimates are set to be released later with it set to increase by 0.2%, with positive results generally bullish for the Pound.

The Euro gained strength against the Pound but lost some against the Dollar during yesterday’s market session. The EURUSD opened at a high of 1.2988 but slipped down to 1.2937 early afternoon before closing slightly higher at 1.2988. Yesterday saw German trade balance falling from 19.6B to 16.3B, a major figure in the Euro-zone as Germany is Europe’s largest economy and renown for exporting so lower results can put pressure on the Euro. The other major information that has already come out of the Euro-zone yesterday was the Sentix investor confidence, improving slightly from -23.3 to -22.2 showing a greater amount of confidence in the Euro-zone.

One of the main reasons for the Euro weakening is because Mario Draghi will speak in front of the Committee of Economic and Monetary Affairs of the European Parliament where it is predicted he will say that difficult times are still ahead and that Euro area leaders should carry on implementing the necessary fiscal reforms in order to protect the economy and that we should not lose confidence in the Euro. German Chancellor, Angela Merkel is set to meet with the Greek government in Athens today to discuss the necessary austerity cuts and other ways to save the Greek economy.

The Dollar gained strength against both the Pound and the Euro yesterday despite no data being released from the US. Today will also see no data being released.

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 15/09/11

The Pound lost a small amount of ground against the Euro, but gained slightly against the US Dollar in the foreign exchange market yesterday. The trading ranges were much narrower than have been seen over the past week or so, with the GBP/EUR exchange rate dropping from the mornings open at 1.1526 to 1.1499 by the days close. The GBP/USD exchange rate though did see a small gain overall, with the morning’s level of 1.5741 moving up a touch to trade at 1.5767 by the end of the day. There was some positive data from the UK yesterday; focused on the labour market. The jobless claims change for August showed a decrease in the number; from 33,700 down to 20,300; a positive sign for the labour market, with the claimant count rate holding at 4.9% , and the overall ILO unemployment rate for the 3 months to July showing no change from levels of 7.9%.

This morning will see the release of Augusts’ retail sale figures from the UK, with the market forecast for no change in the annual level, but expecting a slight decline in the monthly figure. This would not be a positive sign for the overall economy, but provided the figure is in line with market expectations the effect on the currency should not be overly detrimental.

The Euro continued to regain some of its previous losses against the US Dollar in the currency exchange market, and also advanced slightly against the Pound yesterday. Figures released from Europe yesterday showed a welcome boost for Europe’s manufacturing sector, with industrial production increasing both annually, and month-on-month, from 2.6% up to 4.2% and from -0.8% to +1.0% respectively. Some of the Euro’s strength could be attributed to that figure, with the Euro-zone’s stronger economies such as Germany relying heavily on industry, and a clear indication of healthy growth will be beneficial to the overall economic picture. CPI (inflation) figures will also cross the wires, with any increasing inflationary pressures set to pose the ECB a serious problem.

The European Central Bank will release its latest monthly report this morning, and it will be closely watched by the market to gauge the potential for policy movement and the ECB’s change in outlook for the coming months. Following the last rate meeting, it became increasingly clear that the central bank is taking a more dovish stance to policy, and is wary of deteriorating economic conditions in the Euro-zone. With the overnight index swaps market now pricing in rate cuts by the end of the year, the market will be keen to try and gain insight into future policy moves from the bank, and the currency could well be affected by this.

The US Dollar finally saw some weakness in the market yesterday, finishing the day lower against the Euro and the Pound. The EUR/USD exchange rate moved up from 1.3656 at the mornings open to 1.3710 by the end of the day, a gain of over half a cent for the Euro overall. There was disappointing news from the US yesterday, with advance retail sales for August showing a drop from 0.5% to 0.0% and retail sales less autos also falling from 0.5% to 0.1%. Lower retail sales is considered to be an early indicator of economic slowdown, and linked closely to deteriorating consumer confidence; and the currency was clearly affected by this.

Today will see release of CPI (inflation) figures from the US, along with industrial production figures and the latest Philadelphia Fed Index. The currency will draw direction from any increased positivity, which the market will be looking closely for any signs of growth in the overall economy.

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

Foreign Exchange Daily Market Update 13/09/11

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The Pound remained relatively unchanged against the US Dollar during yesterday's trading session leaving conditions less than ideal for buying Dollars. The foreign exchange market bared witness to some choppy trading as the Pound slipped to an early morning low of 1.5790, against its US counterpart, before climbing to its afternoon high of 1.5886. As the European market drew to a close, the GBP/USD exchange rate fell to the day's low of 1.5771 before climbing back to 1.5853 by the close of the US market. Despite a lack of meaningful economic data from both Britain and the Continent, the Pound lost ground against the Euro to see the GBP/EUR exchange rate fall from its high of 1.1714 to 1.1574, however the market was still favourable for buying Euros.

This Tuesday the UK is scheduled to see August's Consumer Price Index (CPI) announced with expectations calling for an annual increase from 4.4% to 4.5%. The predicted outcome could potentially bolster the Pound's trading power against the other currencies. Along side the CPI's release, July's visible trade balance figures are expected to show that the UK's trade deficit has shrunk since June. Just like with the release of the CPI reading, the Pound could gain strength if trade deficit narrows in line with expectations.

The Euro gained ground against both the British Pound and the US Dollar during Monday's session, with currency exchange market seeing the EUR/USD exchange rate picking up from 1.3554 to a high of 1.3694. The Euro's reversal could be attributed to ECB President Jean-Claude Trichet's comments following the Global Economy Meeting held in Basel, Switzerland. The European Central Bank (ECB) President gave a show of strength when he announced that European central banks were "united" in guarding against inflationary and deflationary risks. He also stated that all Europeans "expect the Greek government to fully deliver on its commitments," and added that there is "superior interest" in observing that satisfactory results take place in Greece.

So far this morning, the Euro retraced some of its gains against the Pound to see the GBP/EUR exchange rate rise above 1.16, while against the US Dollar the exchange rate slipped to 1.3597. The Euros decline could be attributed to the better than expected growth rate in the French CPI reading for August. Normally higher CPI readings would be positive for the currency but considering that the ECB is has indicated that it may look to slash interest rates, price growth would only be a hindrance to the region.

With little economic data out from the US on Monday, the Dollar remained unchanged against the Pound, although the currency pair did test the lower ranges twice on Monday, but this was short lived as the exchange rate corrected itself to levels above 1.58. The same could not be said for the Dollar's performance against the Euro which overpowered the Dollar to see the Euro rate make gains.

Looking ahead the most significant piece of data to come out from the US will be August's Monthly Budget Statement which economists forecast to increase from a budget deficit of $90.5 billion to $132 billion. The outcome will likely have a negative impact on the US Dollar when the data is released at 19:00 BST.

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

Foreign Exchange Daily Market Update 12/09/11

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The Pound finished last week having managed to make an impressive gain against the Euro in the foreign exchange market; but having fallen heavily against the US Dollar. The GBP/EUR exchange rate which opened the week at levels of 1.1413, stayed fairly range-bound until Thursday’s Bank of England and European Central Bank (ECB) meetings. Following an extremely dovish outlook from the ECB, the Pound took full advantage of Euro-weakness and the exchange rate moved up rapidly, closing on Friday at 1.1617. Aside from the Bank of England’s expected decision to keep rates and asset purchases on hold; the overall picture from the week’s UK economic data was negative though. PMI services data showed a downturn in August, from 55.4 to 51.1; Industrial and Manufacturing production both dropped annually, and producer price index figures showed no change annually, but a drop monthly from 0.3% to 0.1%.

The week ahead does contain a few pieces of high-level market data from the UK. Tuesday will see the release of CPI (inflation) figures, with the market forecast for price-growth to have increased, both annually and month-on-month; which could potentially put the Bank of England in a difficult position in terms of interest rate policy. Sustained levels of inflation would put pressure on the central bank to raise rates; but with the economy still in a fragile state, and the central bank’s continued view that the current levels are temporary, it will be interesting to see how the market reacts. Wednesday will put the UK’s labour market under close scrutiny, with the release of jobless claims change for August, along with the latest claimant count rate figures, and the latest snapshot of the headline UK unemployment rate. Thursday see’s retail sales figures cross the wires, with the week closing out with Friday’s earl morning consumer confidence figures. The Pound does have the potential to continue its drive against the Euro this week; but is more likely to be stoked by increased turmoil and worsening sentiment in the Euro-zone as opposed to large amounts of positive data from the UK.

The Euro took a hammering in the currency exchange market last week, losing huge ground against both the Pound and the US Dollar. There were a number of negative data releases from Europe, namely a downward revision in Euro-zone 2nd quarter GDP from 1.7% to 1.6%, and hugely disappointing factory orders data from Germany. Figures from Germany also showed a drop in the nation’s trade surplus; indicating a slow-down in export activity; which could be attributed to an overly-strong currency, a possible damaging effect of overly-strong policy and rate-hikes from the ECB over the previous months. The biggest risk event though for the Euro was the ECB’s interest rate meeting on Thursday, at which the ECB President Jean-Claude Trichet took a hugely dovish stance; highlighting the downside risks to economic growth, with a shift in over-night index swaps indicating the market now expects the central bank to make rate-cuts by the end of the year. The currency suffered instantly, the EUR/USD exchange rate moving from the week’s open at 1.4141 down to 1.3649 y Friday’s close; following the rate meeting.

This week will see hardly any data from Europe cross the wires; but there is still potential for the data to affect the market heavily. Euro-zone industrial production figures will be released on Wednesday, with any further drop in levels set to increase the pressure on the currency. Thursday will be a major day in terms of risk; with the release of Euro-zone CPI (inflation) figures for August, and also the ECB will publish its latest monthly report. Any rise in price-growth will put pressure on the ECB; which is in no position to make further rate–hikes to control inflation. The ECB’s monthly report is likely to give more insight into policy-makers views on current economic conditions, and the outlook for next few months. The Euro is facing headwinds already this morning with news crossing the wires that Germany’s Chancellor Angela Merkel is set to pass comment on the current Greek debt situation; and the media expectation being that the nation (Germany) is growing increasingly tired of bailing-out weaker nations, and that Germany may be set to ‘wash it’s hand’ of any involvement; which would be disastrous for the Euro-zone.

The US Dollar continued to benefit heavily from turmoil in Europe last week, gaining across the board; its status as a safe-haven currency helping to push the GBP/USD exchange rate back down from the week’s open at 1.6142 to 1.5857 by Friday afternoon. Risk sentiment was the main driver for the Dollar; with minimal economic data crossing the wires from the US during the week. ISM non-manufacturing figures for August showed a slight increase in activity from 52.7 to 53.3, and US trade balance figures showing a decrease in the nation’s trade-deficit. The release of the Federal Reserve’s beige book economic survey showed little in terms of positive news, with most of the Fed’s twelve districts reporting distinctly average conditions for retail sales and housing, with some districts showing contractions in activity.

The US economic docket will see some significant data released this week. Tuesday will see the US’s monthly budget statement cross the wires, followed by the market-moving advance retail sales figures on Wednesday, along with business inventories and producer price figures. Thursday will focus on price-growth, with the release of the latest CPI (inflation) figures, as well as industrial production, and the latest Philadelphia Fed Index. The week will round off on Friday with the University of Michigan confidence survey; with the overall market view for the Dollar to maintain it’s gains amongst what will be a turbulent week for Europe.

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

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Foreign Exchange Daily Market Update 02/09/11

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The Pound continued to fall against both the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate fell from 1.1347 at the mornings open down to 1.1328 by the days close. The GBP/USD exchange rate followed a similar pattern to the previous day, with a large slide from 1.6230 down to 1.6170 throughout the day. The economic data released from the UK yesterday was disappointing; with Nationwide house prices for August stagnant at -0.4% amid market forecasts for an increase to +0.4%, further enhancing the fragile state of the UK’s housing market. The manufacturing sector also disappointed; with the PMI manufacturing index for August falling from 49.4 to 49.0.

There are no scheduled data releases from the UK today, leaving the currency open to shifts in risk sentiment and news from the world’s other major economies.

The Euro again lost ground against the US Dollar, but gained slightly against the Pound. The EUR/USD exchange rate fell from 1.4301 down to 1.4276 across the day, the single-currency coming under fierce pressure amid a fairly poor economic docket; with 2nd quarter German GDP showing no change in the previous reading, the n.s.a growth rate level at 2.8%, and the w.d.a figure at 2.7%. German PMI manufacturing for August fell, from 52.0 to 50.9, with the Euro-zone PMI manufacturing index also falling, from 49.7 to 49.0.

Today will see the release of German PPI figures; with the market forecast for prices to rise both annually and monthly; which may not be a positive result for Europe, as rising producer prices are a good early indicator of rising inflation, which the ECB is determined to keep suppressed. With the current fragile overall economic state of the Euro-zone, rising inflation would be a serious issue, with the ECB having little room to be able to raise interest rates further after having done so twice this year already.

The US Dollar continued to show good gains in the currency exchange market, against both the Euro and the Pound; despite slightly disappointing economic data, with ISM manufacturing and prices paid for August both falling, from 50.9 to 50.6 and from 59.0 to 55.5 respectively. The currency has been finding strength on two fronts; as a safe-haven currency for investors with deep-rooted worries over the current burgeoning debt problems across Europe, and the fact that it seems almost certain that the Federal Reserve will be undertaking further monetary stimulus to boost the nation’s fragile economy.

This afternoon could see the US Dollar make sharp movements in the market, with the highly volatile Non-farm payrolls report for August. The market forecast; albeit often way off the mark, is for a drop in the reading, from 117,000 to around 65,000; which would be negative for the Dollar; but as is often the case, a revision of the previous month’s figure, and a large surprise in the current month’s level could see the currency fluctuate rapidly upon the data’s release.

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Foreign Exchange Daily Market Update 04/08/11

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The Pound picked up against both the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate moved up from the morning’s open at 1.1447 to trade at 1.1460 by the day’s close, with the GBP/USD exchange rate rising from 1.6305 to 1.6409 throughout the day. The sole piece of economic date from the UK was PMI services figures for July, with the index showing improved growth from the previous month’s level of 53.9, up to 54.4.

Today’s main event will be the Bank of England’s interest rate meeting, with the market fully expecting no change in either the base rate, or the asset purchase target; but despite inflation remaining well above the bank’s target level of 2.0%, weak economic growth is preventing policy-makers from raising rates from their current historic low of 0.5%. There is unlikely to be any comment from the bank alongside today’s decision, with the market having to wait for the release of the minutes for the possibility of any change in the voting numbers.

The Euro slipped slightly yesterday, but did make some gains against the US Dollar, the EUR/USD rate moving up throughout the day from 1.4240, to trade at 1.4317 by the day’s close. The European economic docket yesterday was fairly positive, with Euro-zone PMI services, and the composite figure showing gains for the month of July, up from 51.4 to 51.6, and 50.8 to 51.1 respectively. Retails sales for the Euro-zone also saw impressive monthly growth, the index showing a jump form -1.3% to a positive 0.9% for the month of June. This did seem to give the currency a slight boost, despite continued claims by various news agencies that Spain will be the next European nation to seek additional funding due to its burgeoning debt-load.

The European Central Bank will be meeting today, like their English counterparts; to decide on any changes to the current base interest rate. After hiking rates twice this year to combat inflation throughout the Euro-zone, it is unlikely that the ECB will do so gain this month; but the market is expecting to see further tightening before the end of the year. Traders will be paying close attention to the post-decision press conference for any visible signs of future policy movements, and ECB President Trichet may well face some tough questions in regards to the health of periphery nations such as Spain, Italy and Portugal.

The US Dollar lost ground all across the currency exchange market yesterday, despite the fact that Congress managed to pass legislation preventing the nation defaulting on its debt repayments. The currency is still facing pressure, as the market picks apart the finer details of the bill, which contains hundreds of billions of dollars worth of cuts, which could well contribute to a slowdown in overall economic growth in the US. Yesterday saw a negative outlook in terms of economic data, with factory orders for June falling drastically, from 0.6% down to a negative reading of -0.8%. ADP employment figures for July also fell from the previous month’s level of 157,000 jobs added, with this months’ figure coming in at 114,000 jobs added. The other figure of not was the ISM non-manufacturing index, which was also a disappointment, with the level falling from 53.3 down to 52.7.

There is no economic data of note scheduled for release from the US today, with only low-level market data on the docket. The currency will therefore be open to movement based on news events and data from the world’s other major economies.

One currency worth taking note of currently is the Australian dollar, which has started to weaken against the Pound, the GBP/AUD exchange rate moving above 1.5300 from last weeks levels closer to 1.4900. Negative retail data, along with poor market confidence has seen the Aussie Dollar slide over the past few days, with investors seeing an increased chance that the Reserve Bank of Australia may start cutting interest rates before the end of the year, despite inflation remaining well above the bank’s 3.0% target. Saul Eslake, a director at the Grattan Institute, said gloomy retail sales figures - the worst since the 1990s recession - prompted investors to believe the Reserve Bank's next move was a cut.

Mike Hood
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Foreign Exchange Daily Market Update 29/07/11

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The Pound extended its gains against the Euro in the foreign exchange market yesterday, while remaining relatively unchanged versus the US Dollar. The GBP/EUR rate picked up from the day's open of 1.1370 and peaked at 1.1442 before closing out at 1.1420. The GBP/USD rate opened at 1.6330 and closed the day unchanged, but not before the currency pair hit a morning high of 1.6363 and then shifting to a low of 1.6290. On the docket the Confederation of British Industries' Reported sales index fell in July unexpectedly to -5 when forecasts had called for the index to increase from June's score of -2 to 2. The data's release coincides with the Pound's drop against the Dollar; however no noticeable difference was witness against the Euro.

This morning, the economic docket is scheduled to see June's Mortgage Approvals released, with expectations calling to for a rise from May's total of 45,900 to 46,000. The outcome would prove positive for the Pound.

The Euro weakened against both the Pound and the US Dollar over the course of yesterday's trading session. The EUR/USD rate slipped from the morning's level of 1.4350, with the pair closing the day at 1.4310. On the docket Germany's unemployment change figure for July headlined the European data set, with the number of unemployed falling by 11,000 which missed estimates for a contraction of 15,000 unemployed. To further compound the outlook of the Euro-zone and the Euro itself, July's sentiment indicators on the economy, the region's industrial and services sectors and consumer confidence all came in below expectations, except for the consumer confidence index which improved marginally but remained entrenched in the negative with -11.2.

On the European economic calendar the currency exchange market has already seen retail sales in Germany fall by 1.0% in June compared to a year ago, however this was a softer contraction than the forecasted 1.6% drop in sales. Looking ahead the annualised Euro-zone Consumer Price Index is expected to hold steady at 2.7% from May into July. The outcome may have little impact on the Euro as the data isn't entirely supportive of a rate hike by the European Central Bank which would've made the currency more attractive to foreign investors. Regardless the Euro is likely to remain under selling pressure today as debt woes continue to weigh on the region.

The US Dollar managed to gain some ground against the Euro as the economic calendar provided an improved outlook for the nation, however no such meaningful move was seen against the Pound. The economic docket revealed that the number of first time claimants for jobless benefits was lower than expected in the week ending 22nd July, with claims falling from 422,000 to 398,000. A rise in pending home sales during the month of June of 17.3% compared to the same time last year also helped to improve the US economic outlook.

Looking ahead, today’s economic calendar is scheduled to see 2nd Quarter GPD figures for the US released with economists forecasting that the annualised growth rate will slow from 1.9% to 1.8%, while the quarter-on-quarter rate is expected to hold steady at 2.0%. This may prove to be positive for the US Dollar given that the US economy is still evidentially growing, and the University of Michigan’s consumer confidence reading for July may also benefit the Dollar if the index increases in line with its 64 forecast reading. However with the US Congress having not yet agreed to raise the debt ceiling, volatility on the US Dollar may ensue when the US market opens, over shadowing any positive indications from today’s economic data.

Sam Kennison
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Foreign Exchange Daily Market Update 28/07/11

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The Pound regained some ground against the Euro, but slipped against the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate picked up from the morning’s open of 1.1336 to trade up at 1.1382 by the end of the day. The GBP/USD rate however, dropped throughout the course of the day, down from 1.6415 to 1.6354 by the UK close. There was only one real figure of not released from the UK yesterday, which was the CBI business optimism reading, which fell drastically from 9.0 to -16.0, but the movements in the currency exchange market may be attributed to larger data events in the world economy than this figure.

Today will see the release of another CBI reading, for reported sales; which the market has forecast to rise from the previous level of -2.0 to a positive 2.0, but the market will be aware of a similar surprise like yesterday’s business optimism reading, which was also expected to show positive gains.

The Euro fell against the Pound and the US Dollar yesterday; the EUR/USD rate plummeting from 1.4480 down to 1.4370 throughout the day. Economic data from Europe was thin on the ground yesterday, with the main focus on July’s German CPI (inflation) reading, which showed that price growth increased by 0.5% throughout the month; which is not necessarily positive news for the currency. The ECB has hiked the base interest rate in Europe twice this year to combat inflation and this figure shows that their measures may not be working fully across the Euro-zone, and they may need to tighten further in the coming months. The worry is though, that further tightening of monetary policy could do more harm than good, with EU member nations with high debt loads already struggling, and further rate hikes could push them to the edge.

This morning has already seen the release of German unemployment change figures for the month of July; with the reading showing -11,000 jobs, down on the previous months’ reading, but slightly better than the market forecast for around -15,000 jobs. Later on will see the release of Euro-zone consumer confidence figures; which are expected to show no change, but the currency could weaken if there is an unexpected drop in sentiment.

The Dollar did recover slightly against the Pound and the Euro, but continues to struggle in the face of the unresolved debt ceiling issues. There was also some negative news from the SU yesterday, with a high-level figure; durable good orders dropping drastically for the month of June, from 1.9% down to -2.1%, which is not good news for the overall economic picture.

With politicians still struggling to resolve the situation, the significance of some economic data may well fade, but the market will still look to today’s pending home sales figures for a gauge into the current state of the US housing market, a key factor in overall economic health; with the currency possibly standing to benefit from any upturn in the current levels.

Mike Hood
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Foreign Exchange Daily Market Update 27/07/11

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The Pound picked up marginally against the Euro, and made significant gains against the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate went up slightly from the morning’s open of 1.1267 to trade at 1.1303 by the close. The GBP/USD exchange rate however; rocketed from 1.6337 to 1.6390 throughout the day, breaking the 1.6400 level in the morning. The main data event from the UK was the 2nd quarter GDP reading, which showed that the annual growth rate fell from 1.6% to 0.7%, and the quarterly rate fell from 0.5% to 0.2%. This was viewed as positive by the market though, with the quarterly rate meeting median forecasts; and not falling below market predictions, which could have been disastrous for the Pound.

Today’s economic docket from the UK will see the release of the CBI’s business optimism figure; which is expected to show a slight increase in the reading; which would be positive for the Pound.
The Euro slipped against the Pound and the US Dollar yesterday; the EUR/USD rate coming down from the morning’s level of 1.4499, to trade at 1.4486 by the market’s close. The only figure of note released from Europe yesterday was the German GfK consumer confidence figures for August, which showed a slight drop in the index, from 5.5 down to 5.4. The constant debt woes surrounding Europe, and the fact that bigger nations such as Germany and France continue to be the nations that contribute the most financially; is starting to take it’s strain on the confidence of the general public in those countries; and is not positive for the currency as low consumer confidence tends to result in lower consumer spending, and retail sales.

The European economic docket today will see the release of German CPI (inflation) figures, with the market expecting no change in the annual inflation rate of 2.4%, and with the ECB’s last 2 rate-hikes expected to maintain inflationary pressures across the Euro-zone, any drop in the level may be viewed positively by the market, as there is a theory that further monetary policy tightening from the ECB in regards to inflation could do more harm to the economy than good.

The US Dollar continued to lose ground in the currency exchange market; with time seemingly running out for Congress to reach a solution for raising the debt ceiling, to prevent a default. Despite this, yesterday’s figures showed that consumer confidence rose for the month of July, from 57.6 to 59.5; suggesting that the US public will continue to spend freely over the coming months as sentiment improves. There was some negative news though, with new home sales figures for July reporting a drop, from 315,000 sales to 312,000 amid market expectations for an increase. This reinforces the fact that the housing market is still weak in the US, and could be one of the factors that slows overall economic growth.

Today will see some high-level market data, with durable goods orders for June set to report. The figure is expected to show a drop; but the market will be wary of any surprises, and even if the figure drops, but comes in higher than expected, the currency could benefit. This afternoon will also see the release of the Federal Reserve’s beige book report; which will give an insight into current economic conditions, as surveyed throughout the Fed’s 12 districts, and draws information from economists, market experts, and key business contacts. Any increased positivity could well see the US Dollar stat to regain some ground.

Mike Hood
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Foreign Exchange Daily Market Update 25/07/11

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The Pound ended the week lower against the Euro, but higher against the US Dollar in the foreign exchange market. The GBP/EUR rate fell from 1.1461 on Monday, to trade at 1.1363 by Friday’s close. The GBP/USD exchange rate though, moved up throughout the week, from 1.6099 on Monday to trade up at 1.6309 by the end of the week. The Pound didn’t really receive any boosts from the economic data that was released during the week. The main data-event was Wednesday’s release of the Bank of England’s minutes from their last policy meeting; which showed no change in the voting for either the base interest rate or the asset purchase target to change, with the central bank being seen as having no alternative to change monetary policy for fear of damaging the economy. Thursday saw some negative news with Nationwide consumer confidence falling from the previous month’s reading of 55 down to 51, along with Public finance figures showing that the amount of money diverted by the government into the public sector increased from 11.3 billion pounds to 21.0 billion pounds. Some positive news however was that public sector net borrowing fell, from 14.6 billion pounds down to 12.0 billion pounds, and retail sales also increased, the annual rate rising from -0.2% up to 0.2%.

The week ahead will see the market focus on Tuesday’s release of 2nd quarter GDP figures, with the annual rate set to fall from 1.6% down to 0.8%, and the quarterly level from 0.5% to 0.2%; which would not be positive news for the UK economy, and will put pressure on both the UK government and the Bank of England to try and stimulate some growth in the economy to prevent a slip back into continuous negative growth. Wednesday and Thursday will be focused on figure releases from the Confederation of British Industry (CBI), with business optimism figures along with July’s reported sales figures set to cross the wires. The currency could well take direction from any upturn in the levels, which would be positive for the overall economic picture. Friday will see GfK consumer confidence figures released, along with mortgage approvals and net consumer credit figures; with the currency exchange market poised to see the possibility of the Pound appreciate, should the figures come in line with, or slightly above market expectations.

The Euro did regain some ground against the Pound, and also managed to surge against the US Dollar last week. The EUR/USD rate moved up across the week, from Monday’s open at 1.4045, to trade up at 1.4351 by Friday’s close. Barring the news that EU ministers agreed to a re-structuring of Greece’s debt on Thursday, all the economic data released form the Euro-zone throughout the week was negative. German producer prices fell annually from 6.1% down to 5.6%, Euro-zone consumer confidence also fell – from -10.3 to -11.4. On Thursday, figures showed a string on disappointments in regards to PMI levels, with German and Euro-zone PMI manufacturing, and services both falling for the month of July. This stream of negative data continued through Friday, with German IFO business climate levels, current assessment, and expectation figures all falling, way below market expectations. However; the resolution agreed for Greece’s debt re-structuring was positive enough to turn the market despite all the negative economic indicators, and the currency managed to find strength toward the end of the week.

This week will see little news from Europe until Wednesday; when the market will look to German CPI (inflation) figures, with the market expecting no change in the annual rate of 2.4%; but a small increase in the monthly level from 0.1% to 0.3% which would be beneficial for the Euro. Thursday will see the release of German unemployment change figures, and also the unemployment rate. With the labour market in Germany staying fairly robust, should there be any disappointments to the downside, expect to see the currency weaken. Friday will close off the week with German retail sales figures, and Euro-zone CPI (inflation) estimates for July; a boost in retails sales may not be enough on it’s own to trigger any upsurge in the currency, but a rise in CPI could be worrying for the economy, as the ECB have already risen rates twice this year to control inflation, but should the rise continue, it would press the ECB into further tightening which could cause problems for the economy.

The US Dollar continued to weaken across the board last week; with a solution still yet to be reached for raising the debt ceiling in the US to prevent the nation defaulting on debt repayments that are due at the start of August. Despite a lot of positive economic data from the US last week, with housing starts and building permits increasing for the month of June, along with the Philadelphia Fed Index soaring from a previously negative reading of -7.7 to a positive 3.2; the currency was rocked by the possibility of a default approaching, and should this happen – ratings agencies will be sure to cut the nation’s credit rating which would then hugely devalue US treasury bonds.

The week ahead will see some high-level data releases, mainly Tuesday’s US consumer confidence figures, along with Wednesday’s release of the Fed’s beige book report, and notably Fridays release of US 2nd quarter GDP figures. The currency will be almost certain to react to any positive upturns in any of these data releases, but the key issue still remains that Congress need to find a solution to raise the US’s debt ceiling in the next week or so; otherwise there could be dire consequences. Should the value of US treasuries drop, and also the US Dollar, the possibility is that large holders of US treasuries and currency; like China, may well look to sell the assets they hold and look for currency/paper with a lower level of risk.

Mike Hood
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