Daily Foreign Exchnage Market Update

The Pound saw itself gain strength against both the Euro and the US Dollar in the foreign exchange market yesterday. The GBPEUR rate opened at a daily low of 1.2303, moving up to a daily high at midday to 1.2380 but then lost the momentum during the afternoon to close out at 1.2370. The GBPUSD rate opened down at 1.5950 and dropped over the first hour of the day to reach a daily low of 1.5950. During the rest of the day it gained some strength, peaking at 1.6048 mid-afternoon and closing slightly lower at 1.6014. There was no data released from the UK yesterday.

This morning saw UK third quarter GDP data being released with figure being much better than expected. The economy contracted during April and June of this year by 0.4% and analysts predicted that the economy would grow by 0.6% between July and September but the figure came out at 1%. Yearly GDP data was also released and the economy was expected to shrink by 0.5% but it stayed flat, not changing at all. The quarter on quarter result showed that Britain has finally left a recession with the best result for 5 years, pre-recession, with Olympic ticket sales and a higher demand for services the supposed reason. As soon as the figure was released this morning the Pound peaked sharply against the majority of currencies, especially against the Euro which shows today would be a good day to buy Euros.

The Euro lost strength against the Pound and the US Dollar during yesterday’s market session. The EURUSD rate opened at 1.2990 and plummeted to a daily low of 1.2921 just an hour after opening. It then picked up during the rest of the day, peaking early afternoon at 1.2983 and closing at 1.2945. Euro-zone PMI (Purchasing Managers Index) was released yesterday, a figure that rates the level of business conditions including employment, production, new orders and supplier deliveries. The figure came out at 45.8, lower then the previous result of 46.1, where a figure below 50 shows a contraction in business conditions. As well as this, Mario Draghi spoke at a closed-door meeting at the Bundestag, Berlin where he started by defending the ECB’s bond buying plan to ease Euro-zone debt. He stated that he expects the economy to remain weak in the short term, reflecting adjustments that many countries are undergoing in order to lay foundations for sustainable future prosperity. Although he believes the economy will be weak the overall felling of the speech was one of optimism as he kept repeating that the economy is moving in the right direction. Today is a very quiet day for the Euro-zone with no significant data being released.

The US Dollar weakened against the Pound but strengthened against the Euro in the foreign exchange market. The EURUSD rate opened at 1.2990 and followed a similar pattern to the GBPUSD rate, falling sharply early morning to reach a daily low of 1.2921. It then strengthened and peaked early afternoon at 1.2983 before closing slightly lower at 1.2945. No data came out of the US yesterday but today will see jobless claims, the number of people claiming for unemployment whilst actively seeking work; a figure that is highly correlated with labour market conditions. The previous result was 388K and the expected figure is set to fall to 370K. Durable goods figures will also be released today, an important figure as durable goods are expected to last longer than three years therefore they have to be worth the investment. The previous result was -13.2% but this result is set to be a positive figure, 7.5%.

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 fall slightly against the Euro in the foreign exchange market with the GBPEUR rate opening at 1.2282, climbing throughout the first half of the day, peaking to a daily high of 1.2307 just after lunch. However over the rest of the day it lost strength to close at a daily low of 1.2280, only marginally down from the opening rate. The Pound also weakened against the US Dollar during yesterday’s market session. The GBPUSD rate opened at 1.6012 and rose to a daily high mid-morning to reach 1.6021 but then lost strength over the rest of the day to close out at a daily low of 1.5932. Only one piece of tangible data was released yesterday, the British Bankers’ Association (BBA) loans for house purchases, the number of new mortgages approved for house purchases by BBA-approved banks which accounts for approximately 65% of all mortgages. The Governor of the Bank of England, Mervyn King, spoke yesterday at the Chamber of Commerce where his main concern was that banks do not have enough capital to absorb losses on bad loans which in turn makes it harder for them to borrow and provide credit needed by households and businesses. Today there will be no data being released from the UK.

The Euro gained strength against the Pound but lost some against the US Dollar during yesterday’s market session. The EURUSD rate opened at 1.3037, peaking early morning to a daily high of 1.3041 but then slipped down below the 1.30 mark to close out at a daily low of 1.2972. Yesterday the eurozone consumer confidence results were released, a survey on 2300 consumers in the eurozone, the figure coming out at -25.6, slightly higher then the previous result of -25.9 showing pessimism within the eurozone. This morning has seen German PMI (Purchasing Manager Index) figures being released, coming out lower than expected, 45.7 compared to the predicted rate of 48. This has seen the Euro lose strength against the Pound showing it may be a good time to be buying Euros. Later today the President of the ECB, Mario Draghi will speak at a closed-door meeting at the Bundestag, Berlin. The meeting is set to cover the budget, EU affairs and finance within the eurozone.

The US Dollar gained against both the Pound and the Euro in the foreign exchange market yesterday even though no data came out of the US. Today will see the Federal Open Market Committee (FOMC) meet and decide on whether to keep the key interest rate the same or change it. It is currently 0.25% and nearly all analysts believe it will be kept at this rate; however the FOMC statement on this contains their outlook on the economy in general and hints about future monetary policies which is why analysts keep a close eye on the releases.

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 09/06/11

The news that Moody’s Investor Services could potentially downgrade the UK’s AAA credit rating pushed the Pound lower during yesterday’s trading session. The ratings agency warned that the UK could lose its top credit rating if the government failled to hit its fiscal targets. Francesco Meucci of Moody’s said, “slower growth combined with weaker-than-expected fiscal consolidation efforts” could be cause “to reconsider our stance.” However Meucci did state that the outlook for the UK’s AAA credit rating remains stable, but the warning was enough to stir the foreign exchange market and the GBP/USD exchange rate fell to 1.6355, but this morning the rate had recovered to 1.6466 making it better to buy Dollars.

For the first time this week the UK will be publishing important economic figures, the main event being the Bank of England's interest decision for the month. Forecasts call for the central bank to hold key interest rates at the historic low of 0.5% and to maintain the stock of asset purchases at £200 billion. A surprise rate hike would bolster the Pound's standing, but given the ongoing weakness in the economy and Chancellor George Osborne's implementation of austerity measures, the chances of this happening are very remote. Prior to the interest rate, the UK's visible trade balance is expected to show a narrower deficit since March from £7.66 billion to £7.549 billion. The news could potentially lift the Pound before the BoE announce their rate decision.

A larger than expected decline in Germany’s export figures for April worked against the Euro yesterday, and the single currency was further hampered by an unexpected contraction in German industrial production over the same period. The figures showed that exports in Germany fell by 5.5%, a much worse result than estimates of a 3.0% decline, while the nation's industrial production contracted by 0.6% month-on-month when a 0.2% increase had been forecast. Europe's second round of GDP estimates did nothing to support the Euro despite confirming that Euro-zone growth was up by 0.8% from 0.3% in the 4th quarter of 2010 as sovereign debt fears continued to weigh on the Euro when news came out that Greece may not receive its next lot of aid. A report published by Reuters said that the EU, IMF and ECB would not provide further aid unless Greece could resolve under-financing in its adjustment programme. The news allowed the Pound to regain its footing against the Euro and the exchange rate rose to 1.1250 by the open of the Asian session and the GBP/EUR exchange rate had slipped back to 1.1238 by this morning.

As always when the Bank of England announce their interest rate decision, so too will the European Central Bank. Economists widely believe that the ECB will hold interest rates at the current level of 1.25%, however there will be huge interest in the conference that follows. Trader's will listen closely to ECB President Jean-Claude Trichet's comments for the key phrase of "strong vigilance" to be dropped, a phrase that signals that a rate hike will take place at the next policy meeting and this would bolster the Euro.

The Fed's Beige Book report headlined the US trading session yesterday, and showed that growth had slowed in the federal districts of New York, Philadelphia, Atlanta and Chicago, while other districts continued to grow at a steady pace, mainly led by manufacturing. Ongoing weakness was reported within the housing sector as demand fell for residential construction and real estate, and consumer spending was also reported lower as consumers struggle with rising food and energy prices and fewer job opportunities. The overall picture is one of sluggish growth in the US, meaning that the Federal Open Market Committee is unlikely to raise rates off the 0.25% low until a more robust recovery is achieved.

Today’s docket will be another quiet one for the US with April’s trade balance sheet standing out as the most influential of the figures out today. Forecasts call the US trade deficit to widen from $48.2 billion in March to $48.8 billion, an outcome that could potentially weaken the Dollar’s standing against the other majors. However the currency could receive a slight lift later into the session as weekly jobless claims figures look set to fall for both initial and on going claimants.