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.

Foreign Exchange Daily Market update 07/06/11

With nothing on Monday's docket to guide price direction for the Pound, foreign exchange traders and market participants alike focused on the news that the International Monetary Fund (IMF) has backed Britain's austerity measures as put forward by Chancellor of the Exchequer George Osborne. The IMF said that "Strong fiscal consolidation is under way [in the UK] and remains essential to achieve a more sustainable budgetary position," and that the current economic weakness and above target inflation, which the IMF forecast to fall back to 2% over "reasonable time frame", are temporary. The Fund went onto say that it remains appropriate for the Bank of England to uphold the "current scale of monetary stimulus". This news supports forecasts that the BoE will maintain its current policy on Thursday when the Monetary Policy Committee (MPC) convenes to announce their rate decision. The IMF's support should have lifted the Pound but it seems the currency exchange market was more interested in the Fund's growth forecasts for 2011, which it lowered from 1.7% to 1.5%. This left the Pound to hit a low of 1.1185 against the Euro and 1.6340 against the Dollar.

Another quiet day for the UK will mean traders will have to hold their breath until Thursday's rate decision by the MPC and the accompanying trade balance data to get a sense of price direction for the Pound.

A better than expected Euro-zone Producer Price Index (PPI) reading for April lifted rate hike expectations, to see the Euro make some early morning gains yesterday as PPI rose by 0.9% over the expected 0.8%. Further to this the election of a new Portuguese government meant that Lisbon can implement the necessary budget cuts and austerity measures as specified by the EU and IMF, and thus ensure further monetary aid if need be.

However the Euro's gains against the US Dollar quickly evaporated when German Finance Minister Wolfgang Schäuble, expressed that it was not absolutely certain that Greece would receive further bailout funding. Given that the single-currency has recently gained support from the notion that Greece will receive funding from the IMF and the EU, the Euro could be in for a major retracement if this is not the case. The Euro's decline was further compounded by ECB Vice President Vitor Constancio who, while delivering a speech in Italy, said the economic outlook for the euro-region remains weak leaving the currency to trade at a low of 1.4550 against the US Dollar.

The forecast stagnation in April's annualized Euro-zone retail sales are unlikely to support the Euro this morning, as the outcome is set to reinforce a weakened outlook for the economy. However a better than expected reading will provide the Euro with the means to retrace some of yesterday's loses. Germany's factory orders for April, which are due for release an hour later, has more potential to lift the single-currency as forecasts call for orders to increase by 2.00% month-on-month after having contracted by 4.00% in March.

While still reeling from last Friday's disappointing Non-farm Payrolls figure, price action for the US currency was largely mixed with economists seeing scope for a third round of Quantitative Easing (QE3) by the Fed in a bid to support the economy. However the US Dollar did benefit from Europe's sovereign debt woes through save haven trading, but it appeared as though markets favoured both the Japanese Yen and Swiss Franc over the Dollar, as a haven, which was evident in the Dollar's decline against both currencies.

Looking ahead the US will see another reasonably quiet docket with Fed Chairman Ben Bernanke making a speech in Atlanta being the key event to watch this afternoon. Bernanke's speech will be closely watched by traders for indications as to whether another round of quantitative easing will go ahead, if so then the Dollar is likely to suffer as it is a clear indication that the Federal Reserve believes the US recovery cannot be sustained without support.