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

Yesterday the Pound weakened against the Euro but strengthened against the US Dollar in the foreign exchange market. The GBPEUR rate opened at 1.2509, peaking early morning to a daily high of 1.2546 before slipping across the rest of the day to close out at a daily low of 1.2492 showing overall it was a good day to be buying Euros. The GBPUSD rate opened at a daily high of 1.5873 and also gained strength in the morning to reach a daily high of 1.5916 before closing the day slightly lower at 1.5884. Yesterday UK CPI (inflation) data was released and came out higher then expected, 2.7% compared to the 2.3% predicted. Food prices, especially produce, were one of the main reasons for the increase and they went up due to the record wet weather we had earlier in the year. The Bank of England want to keep inflation low at 2% and the normal way of doing so is by rising interest rates which it will not do during a period of weak economic activity. This month’s results were a lot different to September’s release where CPI was 2.2%, the lowest for nearly three years.

This morning we have already seen UK jobless claims be released, showing the change in the number of people claiming unemployment benefits during the previous month and came out at 10.1K even though there was predicted to be no change from last month where it fell by 4K. Later today the Bank of England will release their inflation report which will show a projection for inflation and growth over the next two years. Mervyn King is also set to hold a conference along with other MPC members to discuss the report’s content.

The Euro gained ground against both the Pound and the US Dollar during yesterday’s market session. The EURUSD rate opened at 1.2688 but quickly dropped to a daily low of 1.2660; it then gained strength during lunch and hit a daily high of 1.2728 before closing the day out at 1.2718. Yesterday the German ZEW consumer confidence survey was released showing whether analysts and investors have an optimistic or pessimistic view on the German economy. The Figure came out significantly lower than expected, -11.5 compared to -9.9 showing that even in Germany patience is wearing thin. Today will see French CPI (inflation) be released with the figure not set to move much, from 2.2% to 2.1%.

The US Dollar saw gains against the Pound but losses against the Euro in the foreign exchange market yesterday. No data came out of the US yesterday but today will see a few significant pieces be released, the first being retail sales showing the change in total value of sales at retail level giving us an insight into consumer demand and confidence. Last month retail sales rose by 1.1% but they are set to fall by 0.2% this month showing a decrease in consumer confidence. PPI will also be released later today revealing the change in the prices of finished goods and service sold by producers and is set to rise by 0.2%, lower then the previous result of 1.1%. The Fed will also release the minutes from the October meeting later today.

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.

Foreign Exchange Daily Market Update 19/05/11

The Pound suffered yesterday as the economic docket reinforced a negative outlook for the nation. The GBP/USD exchange rate slipped from the day's high of 1.6288 to 1.6105 when it came to light that the number of Britons claiming jobless benefits rose in April by 12,400. This is the fastest pace of jobless growth the country has seen since January of 2010, and came in despite estimates calling for no change to occur in the claimant count rate. Further to this the Bank of England published it's minutes to May's policy meeting, revealing that most members of the MPC see raising interest rates as a risk to economy's recovery. The minutes showed that the vote was split 6-3 in favour of keeping interest rates on hold this month. As usual Andrew Sentance voted for a 50 basis-point increase, while Spencer Dale and Martin Weale continued to vote for a 25 basis-point rise. Many trader's had hoped that; given the central bank's forecasts on inflation reaching 5% this year and recent data pointing towards these forecasts being true, that more policy makers would have shifted to a more hawkish stance, which would have lead to an appreciation in the Pound as rate hike expectations increase.

April's retail sales figures headline the UK's docket. Expectations had called for sales inclusive of fuel receipts to grow by 0.8% up from March's 0.2% increase, while excluding fuel sales, retail figures advanced by the same margin. However when the figure beat these expectations to see sales excluding fuel reciepts rise by 1.2% month-on-month and inclusive of fuel sales there was 1.1% increase, and further to this March's figures were revised up to 0.4% and 0.3% respectively. The market has reacted well to the news with the Pound putting in gains against the Dollar and the Euro.

A mixed outlook from ECB board members made it difficult for traders to speculate on where the Euro currency exchange rate is heading. Greece came back into the lime light when ECB board member Vitor Constancio said that restructuring Greece's debt could be in store to avoid a default, but argued that it ought to be "the last resort" as it entails "enormous consequences." However Governing Council member Ewald Nowotny said restructuring of Greece's debt is "definitely not an element of discussion" at the ECB. He then spoke of interest rates saying that rates will rise to match growth and inflation, despite the fact that further hikes could raise the risk of debt contagion. But for the most part it seems sovereign debt fears weighed on the Euro through the first half of yesterday as the EUR/USD dropped to a low of 1.4197 from 1.4286.

The European docket is looking exceptionally light today with the only event of interest being ECB President Jean-Claude Trichet and ECB Executive Board Member Gertrude Tumpel-Gugerell's commentary on the state of the European economy. Typically Trichet's comments hold a lot of sway within the foreign exchange market so expect the Euro exchange rate to move in either direction depending on the outlook Trichet provides.

The highlight of yesterday's North American trading session was the release of the FOMC's latest minutes. For the most part the minutes echoed Chairman Ben Bernanke's comments at the post-decision press conference in April, where he cited concerns among Fed policy makers over the "upside risk to the inflation outlook," and the downside risk to growth. However a few policy makers at the meeting said the increase in inflation risks meant that the Fed should stand ready to tighten financial conditions sooner than had been expected.

The week's second round of US housing figures make an appearance on today's docket. Existing home sales are expected to have risen by 2.0% in April, a slow down from March's 3.7% rise in sales. The data has the potential to weaken the Dollar's standing against the other majors as the housing market looks to remain week. With New homes sales having grossly missed expectations earlier in the week it is possible that today's figures could do the same.

Foreign Exchange Daily Market Update 18/05/11

The Pound saw a sharp appreciation in the currency exchange markets yesterday morning, following a bigger than expected rise in UK consumer prices. The data showed UK CPI at a 2 and-a-half year high of 4.5%, beating analyst’s estimates for a reading of 4.2%. However, the currency pared its gains later on as investors acknowledged higher inflation for now was unlikely to lead to an interest rate rise before year-end. Jeremy Stretch, currency analyst at CIBC commented ‘’ There were rumours of a strong figure around 4.4 percent, but it's higher than that’’, but added ‘’ Sterling hasn't really been able to push on after the knee-jerk reaction’’.

In a letter to the UK Treasury, Bank of England (BoE) Governor Mervyn King said that trying to bring inflation back to target quickly (by raising the key interest rate) would risk harming the economy and undershooting the central bank's 2.0 percent target in the medium term. Rate-setter Ben Broadbent, who will replace one of the most hawkish members of the Monetary Policy Committee (MPC), Andrew Sentence next month, told the government's Treasury Committee there remained "huge risks" both to raising or not raising rates, adding that he would have broadly followed the BoE's direction on policy, suggesting he does not share Sentance's strong arguments for raising rates.

This morning saw the release of the BoE’s minutes from the last policy meeting. There was little surprise when the minutes revealed no change in voting for either the key interest rate, or the central bank’s asset purchase programme; the MPC members voting 6-3 and 8-1 for the maintaining of the current interest rate and asset purchase target respectively. This news was closely followed by UK unemployment figures, which showed that the number of unemployed fell for the 3 months to the end of March by 36,000 to an overall figure of 2.46million. This change leaves the UK unemployment rate lower at 7.7%, down from 7.8%, but the claimant count actually rose from 4.5% to 4.6% for April.

The Euro currency has been on a downward trend through the early part of this week, particularly against The Pound, and yesterday’s disappointing ZEW Economic Sentiment survey results for Germany and the Euro-zone as a whole did little to provide the region with a boost. Turbulent times are ahead for the region, with IMF chief Dominique Strauss-Kahn currently behind bars at the Rikers Island facility in New York, facing charges of alleged sexual assault. His incarceration has thrown one of the world’s most powerful financial institutions into chaos, with market experts predicting that it could have larger ramifications for the European and global economy, and in turn the foreign exchange markets. Strauss-Kahn was the strongest voice behind muscular but often unpopular efforts to prevent debt defaults in Euro-zone nations, including Greece and, more recently, Portugal. The IMF’s temporary head, John Lipsky, is a highly respected former U.S. Treasury official and one-time JPMorgan Chase executive. But he’s not nearly as well-known in the political world, causing many to wonder whether the IMF will falter in making the case for widely shared contributions to financial rescue efforts.

The US Dollar weakened against most of its major counterparts during the overnight trade, but to be regaining its footing as investors scale back their appetite for yields. The dismal report for US housing starts yesterday and build permits may well have sparked a rise in risk aversion, and the rebound in the Dollar may gather pace, benefiting once more from its safe-haven status. However, the Federal Open Market Committee is scheduled to deliver its policy meeting minutes this evening. Any comments from the central bank are likely to heavily influence rate movement and we may see Chairman Ben Bernanke continue to highlight the ongoing weakness within the real economy as he aims to encourage a sustainable recovery, with chances of an interest rate-hike whilst the recovery remains frail remaining increasingly unlikely.

Foreign Exchange Daily Market Update 17/05/11

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

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

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

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

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

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