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

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 last week’s foreign exchange market session the Pound lost strength against the Euro and the US Dollar. The GBPEUR rate opened the week at 1.2507 and moved to a weekly high of 1.2546 on Tuesday morning before dropping to a weekly low of 1.2399 on Thursday afternoon, closing the week out at 1.2475. The GBPUSD rate opened at 1.5897 and moved to a weekly high of 1.5916 on Tuesday morning before dropping to a weekly low of 1.5825 on Thursday afternoon, closing the week out at 1.5867. It was a bad week for data release out of the UK as the majority of results came out worse than expected. Tuesday saw CPI (inflation) higher at 2.7% compared to the 2.3% predicted. The result was mainly blamed on higher tuition fees and food and non-alcoholic beverages which were the second largest contributor. The claimant count change showed an increase of 10.1K even though it was expected to fall by 0.5K, showing there was a much higher amount of people claiming unemployment benefits in the previous month. The final bit of significant data that came out was retail sales which fell by 0.8%. This week will not see much data be released, the most important piece being the release of the MPC meeting minutes which shows how many MPC committee members voted for a rate increase, decrease or hold.

The Euro gained strength against the Pound but lost ground against the US Dollar last week. The EURUSD rate opened the week at 1.2753 and hit a weekly low of 1.2660 on Tuesday morning before gaining strength and peaking at 1.2802 on Thursday afternoon before closing the week out at 1.2717. German economic sentiment came out worse than expected, -15.7 compared to the predicted level of -9.9 showing a low level of confidence in Germany. French and German GDP figures came out last week and both saw an increase of 0.2%, better than expected. French and German PMI are expected to come out this week; the French result is set to come out slightly higher than before at 44.1 and the German slightly lower at 45.9.

The US Dollar saw gains against both the Pound and the Euro in the foreign exchange market. US CPI was higher than expected coming out at 0.2% compared to the 0.1% predicted. Retail sales also fell by 0.3%. This week will see unemployment claims come out and are set to fall from 439K to 397K. The chairman of the Fed, Ben Bernanke is set to make a speech on Tuesday entitled ‘The Economic Recovery and Economic Policy’ at the Economic Club in New York. Existing home sales are also set to be released and are predicted to rise slightly from the previous month to 4.76M.

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

Daily Foreign Exchange Market Update

Yesterday in the foreign exchange market the Pound 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 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 we saw very little change between the Pound and the Euro in the foreign exchange market with the Pound slightly losing strength against its single currency counterpart. The GBPEUR opened at 1.2310, sharply dropping to a day low an hour after the open of trade, to 1.2299 before gaining strength over the next hour to peak at 1.2332. It then lost some ground across the rest of the day before closing only slightly lower at 1.23095. The Pound however gained strength against the US Dollar yesterday with the GBPUSD opening at 1.6134 slipping early morning to a day low of 1.6115. During lunch it peaked to 1.6178 before ending the day lower at 1.6178. The main piece of data coming out of the UK yesterday was unemployment rate which fell to 7.9% from 8.1%, the lowest rate since June 2011, some positive news for the economy. The only significant piece of data coming from the UK today is retail sales which came out at 2.9%, the same as the September 2011 result, it was only predicted to increase by 2.4% showing a greater consumer demand, in turn, a greater consumer confidence and economic growth. The month on month result increased by 0.6%, a lot better then last month's result of -0.2%.

The Euro gained a minimal amount of strength against the Pound and gained against the US Dollar during yesterday’s market session off the back of no data coming out of the Euro-zone yesterday. The EURUSD opened at 1.3107 before dropping to a day low minutes after the open of trade, to 1.3091. It gained over the morning and peaked early afternoon to 1.3137 before closing slightly lower at 1.3132. The main information from the Euro-zone today is that Angela Merkel is speaking at the EU summit later. She has already addressed the German government in the Bundestag where she reiterated her wish for Greece to stay in the Euro-zone. The EU summit today is meant to address youth unemployment which is one of the major concerns in the Euro-zone at the moment as well as discussing banking supervision and oversight. Later today Spain are set to sell 3, 4 and 10 year bonds hoping to raise between 3.5 and 4.5 billion Euros, however in the pre-market all the bonds are trading slightly lower then they were in previous auctions.

The US Dollar lost strength yesterday against both the Pound and the Euro during yesterday’s market session. The main data was from the housing sector where building permits and housing starts were released. Both increased more than expected with building permits coming out at 894K compared to the prediction of 810K and housing starts were a lot higher then analysts’ view of 770K, coming out at 872K. Today initial jobless claims will be released from the US with an increase expected, 363K compared to the previous result of 339K.

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

Daily Foreign Exchange Market Update

Yesterday saw the Pound gain some strength against the Euro and the US Dollar in the foreign exchange market. The GBPEUR opened at 1.2406 and fell to a day low of 1.2379 at noon before picking up during the second half of trading, closing at a day high of 1.2408. The GBPUSD opened at a day low of 1.6030 gaining ground throughout the day, peaking early morning at 1.6078 and closing only slightly lower at 1.6068. No data was released yesterday from the UK.

Today the main piece of information from the UK today is the CPI results that are expected to rise by 2.2% compared to 2.5% this time last year. CPI is always a key figure as it is the main measure for inflation, tracking changes in the price of a basket of goods.

The Euro lost ground against the Pound but gained some against the US Dollar in yesterday’s market session. The EURUSD opened at a day low of 1.2920, gaining strength in the morning before peaking at noon to reach 1.2979 – closing out lower at 1.2949. Yesterday the Commission president Jose Manuel Barroso spoke in Brussels and praised the EU’s international marketplace as the ‘cornerstone of European integration and sustainable growth’ and stated that he had seen a greater degree of openness in the council recently, showing greater confidence for the Euro-zone.

Today will also see CPI data coming out of the Euro-zone with the year-on-year figure for September set to increase by 2.7%, in line with the previous year’s result.

The US Dollar lost strength against both the Pound and the Euro yesterday on the back of advanced retail sales for September being released. This monthly measure of sales and goods at retail outlets is a significant market mover with more than 10% of all US economic activity being from retail sales. The figure increased by 1.1%, more then the analyst predictions of 0.8%.

The only significant piece of data coming out today is the CPI results, like the UK and Euro-zone, and is also expected to increase, by 1.9%, only slightly higher then the 1.7% increase last September.

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

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 13/07/11

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The Pound finished the day slightly lower against the Euro, but reversed the pattern of the past few days to gain some ground back against the US Dollar in the foreign exchange market. The GBP/EUR rate dropped from the morning’s open at 1.1425 to finish the day trading at 1.1374, still good levels for people buying Euros; considering that much of the past 2 weeks was spent with the exchange rate hovering closer to 1.10. The GBP/USD exchange rate went against the current trend, to gain from the morning’s level of 1.5819 to trade up at 1.5935 by the day’s close, welcome news for people buying Dollars who would prefer to see the rate trading over 1.60.

The economic data release form the UK yesterday wasn’t hugely positive though. CPI figures showed a drop in the inflation rate, annually, from 4.5% down to 4.2%; which puts a dampener on any chances of a rate-hike from the Bank of England, and re-affirms policy-maker’s stance that high levels of price growth are temporary, and will ease over time. Retails price index figures showed no increase, with the figure holding at 235.2 amid forecasts for a rise to 235.8. The UK’s trade balance also showed a worse situation than expected, with the negative deficit increasing to -£8.478million from -£7.643million; reinforcing the UK’s huge over-reliance on imported goods.

This morning has already seen some fairly important economic data released from the UK, and it is all labour-market focused. The ILO unemployment rate figures have been released, with the rate staying unchanged at 7.7%. The claimant count also remained unchanged at 4.7% for the month of June, but a slight negative twist saw the amount of jobless claims increase to 24,500 in June, up from 22,500 the previous month. This was a big surprise to the market as forecasts were calling for the number of jobless claims to drop to around 15,000, and is a blow to what is still quite a weak labour market in the UK.

The Euro managed to gain some ground back against the Pound, and also the US Dollar yesterday. The EUR/USD rate pushed back up throughout the day from 1.3845 in the morning, to 1.4016 by the market close. There was some positive news from the European calendar yesterday, with French CPI showing an annual increase, up from 2.2% to 2.3%, showing that there is a small amount of price growth despite the European base-rate being raised twice this year already. German CPI however, fell, with the EU harmonised figure showing a drop from 2.4% to 2.3%.

There is not much data scheduled for release from Europe today, but we will see shortly Euro-zone industrial production figures, with the market expecting to see slight increase in the monthly level, but a small downturn in the annual production rate. This could well affect the currency exchange market, as Europe and particularly Germany relies heavily on industry, and any slowdown in this sector could be detrimental to overall economic growth.

The US Dollar weakened off across the board yesterday, with the market focusing on the release of the Federal Reserve’s minutes from their last policy-meeting, which showed above all, indecision among policy makers on how to proceed. Some policy-makers argue that if the unemployment market stays weak, the Fed should consider expanding the money supply through quantitative easing – or buying Treasury bonds. However, some of the Fed’s policy-makers argued that the current situation of moderate inflation, along with high unemployment suggests there may be more fundamental changes at work in the economy, with workers shifting sectors and losing skills because of long periods of unemployment. Those structural changes in the economy, these officials argued, “May have temporarily reduced the economy’s level of potential output,” the minutes said. If that’s the case, they added, the Fed may need to start pulling money out of the economy sooner than markets now anticipate. Along with the US’s negative trade balance increasing from -$43.6billion up to -$50.2billion, the currency has suffered in the market.

Today will see the foreign exchange market focus again on rhetoric, with Fed chairman Ben Bernanke set to make his semi-annual report to Congress, and will be sure to face questions on future policy, and the current debt-ceiling issue, as well as the market looking to the chairman’s expectations and assessment of the overall economic picture in the US.

Mike Hood
KBRFX

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Foreign Exchange Daily Market Update 12/07/11

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The Pound finished the day following the same pattern as much of last week; higher against the Euro and slightly lower against the US dollar in the foreign exchange market. The GBP/EUR exchange rate pushed up from the morning’s open at 1.1293 to trade at 1.1350 by the close, with the GBP/USD rate dropping from the morning’s level of 1.5970, down to 1.5925. This was again good news for people who are buying Euros, but not so good for those buying Dollars. There was no economic data of note released to influence movements, with the market taking direction from the ongoing unsolved debt issues in Europe.

Today will be a different story in terms of economic data though from the UK, with a lot of high-level releases. The early hours of the morning will see Nationwide consumer confidence figures released, which could have a bearing on the direction of the Pound, should we see any surprises to the negative, or the upside. The market will also focus on the release of CPI (inflation) figures, both annualised and monthly, with forecasts calling for no change. Also, retail price index figures are due to report, with analysts calling for a slight increase in the index, from 235.2 up to 235.8. Another piece of important data will be the UK’s visible trade balance, which is set to see a slight improvement in the negative surplus, indicating a boost for the UK’s export market.

The Euro continued to weaken against the Pound and the US Dollar, with the GBP/EUR rate falling from 1.4140 to 1.4029 from the market open to the close. The ongoing unsolved debt issues in Greece are not helping the currency, which despite the ECB hiking rates for the second time this year last week, is suffering because of uncertainty, and the increased possibility of default. Today saw some low-level market data from France, with Industrial and Manufacturing production figures showing impressive monthly growth, from -0.5% up to 2.0%, and 0.1 up to 1.5% respectively. The currency exchange market however, took little notice of this, and continued to show the negative attitude towards Europe’s current situation.

The European economic docket on Tuesday will see some important data from Germany. CPI (inflation) figures are set to show a slight drop in the harmonised level of growth, with the market predicting a slowdown in the annual rate from 2.4% to 2.3%, and no growth month-on-month, with the level set to hold at 0.0%. This would not be good news for the Euro, as it would show that the largest economy in the Euro-zone is showing a drop in prices, going against the ECB’s rhetoric that rate-hikes are necessary to combat inflation.

The US Dollar continued to strengthen in the foreign exchange market yesterday, benefiting from its safe-haven status by gaining against the Euro and The Pound. There were no significant data events released from the US to back up any positive movement, but the feeling among traders is that inflows to the currency during times of uncertainty particularly within the European market are benefiting the Dollar.

Today’s data may exert more influence on the currency market; with US trade balance figures set to show an increase in the negative surplus incurred by the US, from -43.7 billion dollars, to -44.0 billion dollars. This is not good news for the US economy as it shows an increasing over-reliance on imported goods, and that more funds for purchases are leaving the US than coming in. The Federal Reserve will also be releasing the minutes form their last policy meeting. The market will watch closely for any indications on future policy, and the Fed’s assessment of the current economic situation.

Mike Hood
KBRFX

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Foreign Exchange Daily Market Update 11/07/11

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The Pound finished last week much higher against the Euro but slightly lower against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate was quite low at Monday’s market open, trading at 1.1090, but moved up steadily over the week to close on Friday at 1.1246, actually hitting a high of 1.1280 during the mid-afternoon on Friday; a much-needed boost for people buying Euros. The GBP/USD rate opened at 1.6110 and fell to a low of 1.5935 on Friday morning, before picking up slightly to close the week at 1.6031.

The economic calendar provided a mixed picture for the UK last week. Monday saw the release of June’s PMI construction figure, which saw a downturn from 54.0 to 53.8. Tuesday was slightly more positive with June’s PMI services figure coming in above estimates, showing an improvement from 53.8 to 53.9. On Wednesday, the UK’s housing market received a welcome boost, with the Halifax house price report showing a monthly increase from 0.4% to 1.2%, and the 3 month-to-June figure showing an upward move from -4.2% to -3.5%. Thursday kicked off with Industrial and Manufacturing figures, which both showed upturns in the annualised and month-on-month levels, but the market was more focused on the Bank of England’s interest rate meeting. As expected the central bank kept the base rate and the asset purchase target on hold, with the market feeling that the MPC had little other option to do so, with an interest rate having the potential to destroy the UK mortgage market and make thousands of homeowners default, and any increase to the asset purchase target could start driving inflation higher. The week closed out on Friday with PPI input and output figures, with the annualised levels showing an increase from 16.1 % to 17% and from 5.4% to 5.7% respectively.

The week ahead for the UK is data-heavy; with the economic docket opening on Monday with RICS house price balance figures reporting. The forecast is for an improvement from -28% up to -25% which would be positive for the housing market. Tuesday will see the release of the Nationwide Consumer Confidence figure, with any drop or increase likely to create waves in the currency exchange market. The data continues on Tuesday with annualised and monthly consumer price index figures, along with retail price index and visible trade balance figures reporting. The Pound is likely to take direction from any increased positivity from these figures. Arguably, the most market-focused data of the week is on Wednesday, with the ILO unemployment rate expected to hold at 7.70%, jobless claims expected to fall, but the claimant count rate to show a slight percentage increase. The UK labour market is still quite fragile, and should there be any signs of weakness, the Pound could certainly suffer.

The Euro suffered badly in the foreign exchange market last week. As well as being hammered by the Pound, the EUR/USD rate also fell steadily across the week, dropping from 1.4525 on Monday’s open to close at 1.4254, hitting a low of 1.4204.

The European economic docket was overall fairly negative across the week. Monday saw a drop in Euro-zone PPI, the annual rate falling from 6.7 to 6.2%. Tuesday saw a similar pattern with Euro-zone PMI composite figures along with retail sales falling. The negative pattern continued through Wednesday, with German factory orders for May reporting a fall, from 2.9% down to 1.8%, and Thursday opening with German industrial production falling annually from 9.3% to 7.6%. The main focus of the week was the European Central Bank’s interest rate meeting on Thursday. As was almost certain, the ECB pressed on with their tightening of monetary policy, and raised the base rate to 1.5%, up from 1.25%, the second rate-hike this year. Traditionally a rate hike would see a currency appreciate; but whilst the raising of rates will help to counteract inflation – the ECB’s sole mandate, it could well prove damaging to European nations, businesses and consumers with any form of high-level or base-rate linked borrowing., and could stunt economic growth across the Euro-zone. The week finished with some positive news, in that the German trade balance continued to show an increased surplus, with the level increasing from 10.8 billion Euros to 14.0 billion Euros.

This week’s European data releases will see some high-level market data. Tuesday will see the release of German CPI figures, with the EU harmonised level set to fall from 2.4% to 2.3%, a result the ECB will take heart from as it may support their thinking that higher rates will bring inflation down. Wednesday will focus on Euro-zone industrial production figures, with the annualised rate set to fall from 5.3% to 4.8%, but the monthly figure to increase from 0.2% to 0.4%. The Euro currency is likely to see sharp movement depending on the tone of the ECB’s July report which will be released on Thursday, along with Euro-zone CPI (inflation) figures. If the ECB report contains any phrases pertinent to another rate-hike this year the currency could well weaken, as the market would view it as a bridge too far for the Euro-zone, and almost certainly damaging to economic growth across the European area.

The US Dollar managed to take advantage of the poor market reaction to the ECB’s rate-hike, and gained considerably against the Euro across the week, also pulling back slightly against the Pound before falling away on Friday afternoon following very disappointing Non-farm payroll figures.

The US market was closed on Monday, for the 4th of July celebrations, so Tuesday was the first sign of any economic data; with factory orders for May showing a slight increase, up from 0.8% to 0.9%. Wednesday’s main economic release was negative though, with ISM non-manufacturing figures reporting a downturn in activity, from 54.6 to 53.3, not supporting the US currency and economic outlook. Thursday was a slight glimmer of hope for the US, particularly the labour market, with the ADP employment change figure increasing drastically from 36,000 jobs to 157,000, smashing market forecasts of around 70,000. This helped the US Dollar hugely, with the figure indicating that the following day’s non-farm payroll data could also be equally as impressive. This was not to be the case though, with Friday’s headline figures showing that the US unemployment rate went up, to 9.2% from 9.1%, and the No-farm payroll figure disappointed hugely, recording a drop from 54,000 down to a mere 18,000. It was this huge miss on estimates that saw the Dollar lose its gains and the GBP/USD exchange rate push back up from 1.5935 to 1.6031 by the weeks close.

The US economic docket this week will kick-off on Tuesday with US trade balance figures; and with the market expecting the negative trade balance to increase, it will be an indication of the US’s increasing reliance on imported goods, and will not be positive for the currency. The Federal Reserve will also release the minutes from their last policy meeting on Tuesday; with the market watching closely for any signs of a rate-hike in the offing, and hoping for positive comment in terms of future growth prospects. Wednesday will see Fed Chairman Ben Bernanke present his semi-annual monetary policy report to Congress, with the currency market poised to take sharp movement from any negative rhetoric on the part of the Fed. It is almost certain that the issue of the US’s debt ceiling needing to be raised to guarantee future repayments will be brought up, as Bernanke may be pressed for comment on how a refusal/or approval from the IMF of the plan could affect policy. Thursday will see the release of advance retail sales figures for June, which is expected to show an upturn, along with PPI figures. Friday could have a huge bearing on the direction of the US Dollar, with CPI annual and monthly figures being released. Any increases in the overall inflation rate could put pressure on the Federal Reserve to start thinking about raising rates, and on the flip-side, a downward movement would dampen any rate-hike expectations, possibly weakening the currency. The final day of the week will also see the widely-respected University of Michigan confidence index report, with the market forecasting an upturn in the level; which could benefit the US Dollar. The Michigan confidence survey is seen as a very timely indicator, and a good early predictor of economic upturn or slowdown by the foreign exchange market.

Mike Hood
KBRFX

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Foreign Exchange Daily Market Update 07/07/11

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The Pound continued to gain against the Euro, but did fall slightly against the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate moved up from 1.1147 to trade above 1.1166 by the end of the day, a welcome change from the previous few days’ downward movement, and making it cheaper for UK consumers buying Euros. The GBP/USD rate slipped slightly, from the mornings open at 1.6026 down to 1.5993 by the close of the UK business day, putting further pressure on people buying Dollars. There was good news from the UK yesterday, with Halifax reporting that house prices rose by 1.2% in June, beating the previous month’s level of 0.4%. Prices also gained 0.7% for the 3 months to June, up from -4.2% up to 3.5%. It is a positive sign, but the UK housing market still remains weak, and it is this weakness that will be restricting the Bank of England from making any increases to the base interest rate, as a rate rise could see a large number of mortgage defaults, with household finances in the UK still being extremely tight.

Today has already seen the release of Industrial Production figures for May, which saw the figures report an increase in output month-on-month from levels of -1.7% up to 0.9%, which although a good improvement, was below market forecast for the figure to report at 1.1%. The main market event for the UK today will be the Bank of England’s interest rate meeting. It is almost certain that the base interest rate will not be changed, as the UK economy is still in a weak state. The housing market, along with the labour market are still under great pressure, and with the Government still to implement further austerity measures to try and reduce the UK’s debt load; it is not the most positive of outlooks.

The Euro slipped against the Pound and the US Dollar yesterday, ahead of the currency exchange market pricing in the almost certain possibility of the European Central Bank raising interest rates today. Also, ratings agency Moody’s cut Portugal’s credit rating to junk levels, and placed a negative outlook on the economy. The EUR/USD exchange rate fell from the morning’s open of 1.4375 down to 1.4321 by the close of play. The economic docket from Europe yesterday though showed a positive outlook, with German factory orders rising month-on-month from 1.8% up to 2.9% , and the annual level also rising from 10.6% up to 12.2%.

The day ahead will focus on the ECB’s interest rate decision. The foreign exchange market is widely-expecting another rise in the base rate, from the current levels of 1.25% up to 1.5%. The ECB has been issuing a strong rhetoric for the past few months, and despite fears that a rate rise could have some negative effects on periphery nations in Europe with weak markets and high borrowing levels, the bank look set to press ahead with another hike.

The Dollar did pull up slightly against both the Pound and the Euro yesterday, with ongoing uncertainty in UK and European markets possibly aiding the Dollar, as investors may be looking to move their money into the widely-regarded ‘safe-haven’ currency. The only real economic data of note yesterday from the US showed that ISM non-manufacturing figures dropped, from 54.6 to 53.3. It seemed though that the market took little reaction to the figure, with not much movement on the market on its release.

Today will see the release of ADP employment change figures for June, with the forecast for a rise from the previous month’s level of 38,000, up to 70,000. Should the figure come in line with expectations, it would be a positive sign for the US labour market, and would help contribute to the overall economic picture.

Mike Hood
KBRFX

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Foreign Exchange Daily Market Update 06/07/11

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The Pound managed to gain some ground against the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate opened at 1.1066 and pushed up throughout the day to trade at 1.1115 near the close. The GBP/USD rate also followed a similar pattern, moving up from the morning’s levels of 1.6021, to 1.6081 at the end of the UK business day. The jump in rates was good news for people who are buying Euro or buying Dollars. There was positive economic news from the UK, which may well have contributed to the rise, with PMI services figures showing the first rise in 3 months; the figure reporting an upturn in activity from 53.8 to 53.9.

Today has already seen some positive news from the UK’s economic docket, with Halifax house prices showing an increase of 1.2% for June; which is the biggest rise since October. Low interest rates combined with more people in employment has helped the housing market, and experts predict that if rates are kept low, we will continue to see improvement over the coming months, which is good news for the overall economic picture in the UK.

The Euro lost ground against the Pound and the US dollar yesterday. The EUR/USD rate fell from the open at 1.4478 to trade below 1.4406 at the end of the day. The economic news from Europe wasn’t positive; with the Euro-zone PMI composite figure showing a sharp decline, falling from 53.6 down to 53.3. Also, Euro-zone retail sales fell drastically, with the annual rate dropping to -1.9 from 0.8%, and the month-on-month level also slowing rapidly, the figure showing a drop from 0.7% down to -1.1%.

This morning will see the release of German factory order figures for May, which are forecast to show a sharp downturn, in both the monthly and annual rate. For an economy that relies heavily on industry, this will not be a good outcome for the Euro, and the currency exchange market could react sharply.

The Dollar recovered some ground against the Euro, but not against the Pound throughout yesterday. US factory order figures did show a sharp, unexpected jump, from -0.9% the previous month up to 0.8%. This news did see the GBP/USD rate pull back from above 1.6115 on its release, to 1.6081 at the close of the day. Through the early hours of the morning the rate has continued to pull back, but this could also be due to a cut in Portugal’s credit rating, with speculative traders buying Dollars to protect their risk exposure.

The US economic docket today will focus on ISM non-manufacturing figures, with the market forecast for a drop in levels, which would not be positive news for the currency.

Mike Hood
KBRFX

Foreign Exchange Daily Market Update 04/07/11

The Pound finished the week a lot lower against the Euro, but slightly higher against the US Dollar in the foreign exchange market. The GBP/EUR rate slipped from 1.1270 on Monday to trade at levels close to 1.1069 by the close on Friday, recovering slightly from a fall to 1.1008 in the earl hours of Friday morning; not good news for people buying Euros. The GBP/USD rate closed the week higher, at 1.6068 on Friday afternoon, up from the levels close to 1.5930 on Monday morning’ the rise in the rate being welcome news for consumers who are buying Dollars. Slight drops during the week for the Pound were not helped by the final reading of 1st quarter GDP showing that the annualised growth rate was revised downwards, from 1.8% to 1.6%, along with PMI manufacturing figures showing a slowdown in the sector, from a reading of 52.1 down to 51.3. Some positive notes were a slight increase in mortgage approvals, from 45,400 to 45,900 and also a small rise in house prices as surveyed by Nationwide, from -1.2% up to -1.1%.

The week ahead does contain some high-level market data from the UK, particularly Thursday’s Bank of England interest rate and asset purchase decision. While the market is expecting no change in either figure, any issued rhetoric form the bank could well affect the market, but any press comment is unlikely; with traders having to wait for the release of the banks minutes in due course for any viable commentary. Friday will be a big day for the currency exchange market as well, with the release of June’s GDP estimate from the National Institute for Economic and Social Research (NIESR). The growth rate is expected to be forecast at 0.4%, which would be down on the official final reading for the 1st quarter of this year, but is still a sign of growth nonetheless. Any drops below this predicated level could see the Pound weaken, as an economic slowdown will be detrimental to the value of the currency.

The Euro managed to find considerable strength against the US Dollar throughout last week, and gained well versus the Pound. The EUR/USD rate moved up to 1.4507 by Friday, after opening the week down at 1.4132. The market did take heart from the Greek Parliament passing a bill to implement medium-term austerity measures, which will help them gain access to funding from the IMF to prevent a default. German consumer confidence figures also showed an improvement in sentiment, along with the German labour market holding firm; the unemployment rate not dropping from the current level of 7.0%.

This week’s European economic calendar; like the UK’s, will contain an interest rate decision from the ECB. However, unlike the BoE, the ECB is widely expected to raise interest rates once again, up to 1.5% from the current level of 1.25%; which would be a bold move by policy-makers, and by all rights should help boost the strength of the Euro within the foreign exchange market. It could have a detrimental knock-on effect within Europe though, as a higher rate could see member states with heavy borrowing levels pushed to the limit in terms of repayments; something that official will be heavily aware of. Away from the ECB decision, the market will be looking to the release of Euro-zone retail sales figures on Tuesday, German factory orders on Wednesday, and German trade balance figures on Friday. With the first two releases expected to record drops, the Euro could come under pressure.

The US Dollar lost ground against both the other major currencies last week; with the economic calendar providing no support for the currency. Personal spending figures showed a drop in levels, from 0.3% to 0.0%, US consumer confidence also dropped significantly, from 61.7 down to 58.5; well below market forecasts. Also, the widely-regarded University of Michigan confidence survey which was released on Friday, showed a drop from 71.8 to 71.5, below analysts’ estimates, and may be considered by the market as an early indication of a slight economic slowdown in the US.

The US economic docket for this week could see the currency make big moves. There will be no data released on Monday, due to the US non-trading day for the 4th of July holiday. Tuesday will see factory orders figures released, with the market expecting a drop in levels. ISM non-manufacturing figures will report on Wednesday, with levels expected to drop as well, so the potential early in the week is for the US dollar to weaken. Thursday and Friday will focus on the US labour market; with Thursday seeing the release of the ADP unemployment change figures, and Friday seeing the release of the highly-volatile Non-Farm payroll figures along with the current US unemployment rate. The overall unemployment rate is forecast to stay at 9.1%, and non-farms are set to show an increase from 54,000 up to 89,000. The figure is prone though to produce big surprises, so expect the currency market to see some sharp movement on Friday afternoon.

Mike Hood
KBRFX

Foreign Exchange Daily Market Update 29/06/11

The Pound slipped further against the Euro yesterday, not the news that consumers who are buying Euros were looking for. The GBP/EUR rate dropped from 1.1163 at the morning’s open, to trade at 1.1142 by the end of the day. There was better news for people buying Dollars though, as the rate picked up from 1.5982, to break back through the 1.60 barrier, with the GBP/USD exchange rate closing the day at 1.6018. The Pound was not helped by the final reading of 1st quarter UK GDP, which although showed no change in the quarterly growth rate of 0.5%, the annual figure was revised downwards from 1.8% to 1.6%. This is a real blow for economic growth prospects in the UK, and the foreign exchange market showed its negative response to this news with the rates dropping as the figures were released.

Today’s economic docket from the UK has seen mortgage approvals show a slight monthly increase, up from 45,400 to 45,900; a positive increase, but falling below the market expectations for a reading closer to 46,300. There are no other figures of real economic note set for release from the UK, but one major piece of news from Europe could well have a big effect on any movements in the currency exchange market.

Following a day of gains against both the Pound and the US Dollar, the Euro will be open to the possibility of sharp movements today. As well as the release of Euro-zone consumer confidence figures, the market will be focusing on the outcome of a vote in the Greek Parliament on austerity measures. For any solutions to be implemented and the IMF to give Greece access to extra funding, this austerity measure bill will need to be passed in Parliament. The market could see a sharp reaction if there is any fallout, and the minute possibility that the bill will not be passed.

The US Dollar did weaken slightly against the Euro and the Pound across the course of yesterday; and the currency was not helped by a poor market reaction to US consumer confidence figures. With the market forecasting only a small drop, from 61.7 to 61.0, the actual figure reported a huge drop down to 58.5. This shows that positive sentiment from the US consumer has fallen significantly, and could be an early indication of a slowdown in personal income and consumer spending, which would translate to an overall slowdown in economic growth.

Today’s US economic docket will see the release of pending home sales figures, and the market will be looking to see if there is any positive support from the housing sector. With the labour market weakening, and also consumer expectations lowering, the currency will need to see some positive sings from this sector if there are to be any gains.

Foreign Exchange Daily Market Update 28/06/11

The Pound closed lower against the Euro, but higher against the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate fell from 1.1270 to 1.1179 through the course of the day, putting pressure on UK consumers who are buying Euros. There was a welcome boost for people buying Dollars though, as the rate moved up from the morning’s low of 1.5930, to break the 1.60 barrier, before falling back slightly to 1.5975 by the end of the day.

There were no economic data releases from the UK yesterday to affect the movement of the currency. Today however will see the release of the final reading of 1st quarter UK GDP. With the quarterly growth rate expected to be confirmed at a level of 0.50% and annually at 1.8%, it is not an entirely impressive outlook for the UK economy, but better than any signs of a drop in growth, which would indicate an economic slowdown. Final figures for total 1st quarter business investment are also set for release, with the market forecasting no change from the previous reading of 3.2%. One figure that may give a positive boost to the Pound though is the UK’s current account balance reading for the 1st quarter; which is expected to see a reduction in the deficit from -10.5billion pounds to -4.7 billion pounds.

The Euro continued to find strength against the Pound and the US Dollar yesterday. The EUR/USD rate closed at 1.4279, a fair movement up from the morning’s level of 1.4134. The only low-level economic data to be released from Europe yesterday were figures showing that Italian hourly wages dropped slightly month-on-month, but held steady annually. The market was not really pushed by this news, as it doesn’t have any real bearing on the overall economic outlook for the Euro-zone.

Today has already seen the release of German GfK consumer confidence for July, which saw an upward movement in the reading, suggesting that sentiment across German society in regards to the economic outlook and their own personal spending is improving. There are a few figures of small economic importance to be released throughout the rest of the day, with Italian producer prices and French total jobseekers claims set for release. These figures though are likely to have little to no impact on the currency exchange market.

The Dollar weakened against the Pound and the Euro yesterday, and the economic docket did little to halt the slide. Figures released yesterday showed that personal income in the US has stagnated, at a level of 0.3%, while personal spending has dropped, from 0.3% to 0.00%, suggesting that wages are not increasing across the country, and regardless of this, consumers are holding onto their money; which is not good for the economy.

The market will focus on US consumer confidence figures that will be released today. The market has forecast a slight increase in consumer confidence, which would be positive for the US currency, as it would indicate a perceived improvement in business conditions, employment and personal spending.

Mike Hood
KBRFX

Foreign Exchange Daily Market Update 27/06/11

The Pound finished the week lower overall against both the Euro and the US Dollar in the foreign exchange market. The GBP/EUR rate fell from Monday’s high of 1.1374 down to the week’s low of 1.1168 on Wednesday; before recovering slightly on Friday to close the week out trading at 1.1264. The GBP/USD exchange rate also dropped over the course of the week. From the open at 1.6149, the Pound managed to pick up to a high of 1.6262 on Wednesday, before gradually falling away to 1.5941 by Thursday, and showing hardly any signs of recovery by the week’s end to trade at 1.5980. This was bad news for UK consumers who will now find an increased cost when it comes to buying Euros and buying Dollars.

The economic docket from the UK last week offered no real positive signs for the economy, hence the poor performance of the currency. On Tuesday it was revealed that the amount of money the UK Government had put into public sector finances had increased for the month of May, up from the previous month’s figure of 3.5 billion pounds, to a level of 11.1 billion pounds. Public sector net borrowing also increased, from 7.7 billion pounds to 15.2 billion pounds; a sure sign that the private sector is failing to pick up the slack left by public sector cuts, so the government needs to divert more funds into the coffers to prevent a knock-on effect to economic growth prospects. The Bank of England released the minutes from their last policy meeting on Wednesday, with the Pound taking a sharp downturn as the results showed that the vote to keep interest rates on hold was by a larger margin than the previous meeting. The vote shifting from a 6-3 margin to a 7-2 majority in favour of holding the current rate, and the vote to keep asset purchasing at its current level was at an 8-1 majority. This really rocked the market, and almost counts out any chance of rate hike this year. Thursday did offer a slight positive, with BBA loans for house purchases showing a monthly increase from 29,747 up to 30,509, but it did little to affect the Pound’s slide.

The week ahead does have some high-level market data for the UK, the most notable being Tuesday’s final reading of 1st quarter GDP. The market is predicting no changes in the final reading, with the quarterly growth rate at 0.5%, and the yearly rate at 1.8%. Should there be any revisions though, either to the up or downside, the Pound could see a strengthening or weakening dependent on the outcome. Wednesday will see mortgage approval figures releases, with the market expectation to see a rise in the number of approvals from 45,200 to 46,300, which would be a positive sign for the UK’s housing market. On Friday the currency exchange market will focus on PMI manufacturing data, which is set to see a slight increase, and could benefit the Pound, by showing a positive contribution to the overall economic picture.

The Euro strengthened considerably against the Pound throughout last week, but fell against the US Dollar. An agreement in principle to a bail-out for Greece, along with the Greek Prime Minister George Papandreou surviving a vote of confidence, the market may well be taking heart from the solidarity being shown by the Euro-zone; despite whisperings of unrest from senior officials. The currency was buoyed on Tuesday with European Commission President José Manuel Barroso insisting that Greece will ‘never’ be allowed to go bankrupt.

Economic data across the course of last week offered a mixed picture for Europe; the German producer price index showed a drop month-on-month, from 6.4% to 6.1%; a negative sign for a country that that relies heavily on industry. The German ZEW economic sentiment survey also showed a drop for June, indicating that financial experts across Germany are less confident in current market conditions. This was echoed in Wednesday’s Euro-zone consumer confidence survey, which also showed a drop, from a level of -9.9 to -10.0, showing that any market doubt is also reaching consumers. Wednesday also showed that Euro-zone industrial new orders fell from 14.3% to 8.6%. The negative outlook was somewhat reversed on Friday though, with the German IFO survey showing an increase in business climate sentiment, and current assessment of the economic picture.

This week’s European economic docket will be watched closely by traders, with the possibility of some surprises. Wednesday will see annualised German CPI figures released, with the market pricing in a slight improvement, from 2.4 to 2.5%, which could boost the Euro currency. Also on Wednesday, Euro-zone consumer confidence is forecast to hold steady at a level of -10.0, which is not overly positive, but any lack of a decline is welcome. Thursday will focus on German unemployment, with the overall rate set to hold firm at 7.0%, no improvement, but again showing no decline, which the market may view positively.

The Dollar gained considerable ground against the Pound and the Euro over the course of the week. The EUR/USD exchange rate coming down from the weeks high of 1.4439 on Wednesday, to a low of 1.4126 by Thursday, coupled with the drop in the GBP/USD rate down to under 1.60.
The Dollar’s gain was definitely helped by a positive economic docket fro the week. The market taking heart from the news that existing home sales reported better than expected at 4.81 million for the month, down from the previous month’s level of 5.00 million, but beating analysts estimates. Continuing claims fell from 3,698,000 to 3,697,000, showing a reduction in the number of jobless claimants; a positive sign for the US labour market. Durable goods orders also increased for the month of May, showing an impressive increase; up from -3.6% to record a positive result of 1.9%, way beyond the market forecast.

The US economic docket for the week ahead may not be as positive overall, with Monday’s personal income figures set to hold steady, and personal spending for US consumers set to decline; not a good sign for the overall economy. The market has forecast a positive rise in US consumer confidence, which is set for release on Tuesday, along with the University of Michigan’s confidence index also set to show a positive increase when released on Friday. However, ISM manufacturing is forecast to decline on Friday, from the previous month’s level of 53.5, down to 51.5, which may put a dampener on any gains seen by the currency.

Mike Hood
KBRFX

Foreign Exchange Daily Market Update 24/06/11

The Pound lost ground against the US Dollar in the foreign exchange market yesterday, the GBP/USD rate falling below the 1.60 mark for the first time since the start of April. This drop instantly puts pressure onto UK consumers who are buying Dollars, with the lower exchange rate meaning that dollar buyers will get less currency for their money. Despite the weakening against the Dollar, the Pound made a small gain against the Euro over the course of the day, closing the UK business day at 1.1278, up from the morning’s low of 1.1246. The only real economic data of note from the UK yesterday was the release of the British Bankers Association (BBA) loans for house purchase figures for May, which showed a slight increase, up from 30,000 to 30,509.

The economic docket for the UK today has no scheduled data releases; so barring any important UK Government statements, or economic-related events, the Pound will be left open to movement based on risk sentiment within the currency exchange market, and key data releases from the world’s other major economies.

The Euro did slip slightly against the Pound throughout Thursday, as mentioned above; giving a small boost to UK consumers who are buying Euros, and also fell against the US Dollar. The EUR/USD rate dropped to 1.4164 by the day’s close, down greatly from 1.4269. The European economic docket did little to support the currency, with French and German PMI Manufacturing figures reporting lower, and the combined Euro-zone PMI results for manufacturing and services also falling, consequently the composite figure reporting far lower than expected.

Today’s European economic docket has already seen the release of German IFO figures, which has seen a positive increase. The German firms who are surveyed to produce the reading have shown that their view of the business climate and current assessment of the overall economic picture has improved since last month’s survey. However, their monthly reviewed expectations for the following 6 month period haven’t improved at all. The market will be watching closely for any news out of the EU leader’s summit in Brussels, with sovereign debt in Greece, and the possibility of debt contagion spreading to nations such as Ireland, Spain and Portugal likely to be high on the agenda.

The US Dollar strengthened across the board yesterday, pulling higher against both the Pound and the Euro. This can be attributed to risk-aversion in the market, with the Dollar traditionally benefiting from its status as a safe-haven currency; with speculative traders usually buying Dollars to avoid any uncertainty in the market such as the current Greek bailout situation in Europe. The currency was also aided by positive economic news, with new home sales for May reporting an increase, up from 310,000 to 319,000; a welcome boost for the US housing market.

The currency may not see much movement based on today’s US economic docket, with durable goods orders the only figure of note set for release. The figure is widely expected to report an increase, which would be a positive result for the US economy as a whole, but may not be sufficient to push the currency in any direction, by itself.

Mike Hood
KBRFX

Foreign Exchange Daily Market Update 22/06/11

The Pound ended up losing ground against the Euro, but making a small gain against the US Dollar through the course of yesterday. The GBP/EUR rate slipped down to 1.1269 from the mornings open close to 1.13, with the GBP/USD exchange rate picking up a touch from 1.6227 to 1.6238 by the end of the day. There wasn’t a great deal of data released from the UK, but the figures that were published showed that Public Sector finances increased in the month of May, from 6.6 billion pounds up to 11.1 billion pounds. But contrary to this, Public Sector Net Borrowing dropped from 16.5 billion pounds to 15.2 billion pounds, showing that the UK Government has increased the amount of funds it diverts into the public sector; but is finding this capital from non-borrowed sources.

The major data event for the UK today will be the release of the Bank of England’s minutes from their last policy meeting. Whilst there was no change in either the base rate, or asset purchase target at the last meeting; the minutes will be studied closely for any signs of a shift in rhetoric; and the all important voting numbers, which may be indicative of future policy. The foreign exchange market is likely to take direction from any surprises within the minutes.

The Euro managed to gain some ground against the Pound and the US Dollar yesterday, despite the ongoing Greek bailout situation. With finance ministers pushing hard for a solution, the market may be viewing a possible resolution as a sign of strength within the European community, and consequently the GBP/EUR rate is still fairly low, making it tougher for UK consumers buying Euros. The economic docket from Europe yesterday was also fairly disappointing, with the ZEW economic surveys showing that sentiment in Germany and the Euro-zone overall fell drastically.

Today will see the release of the Euro-zone industrial new orders figures from April, and also Euro-zone consumer confidence figures for June. The currency could strengthen if the figures show positive gains, but any push is more likely to come from the bigger ongoing risk-event of Greece’s sovereign debt problems and the potential contagion of this to other nations such as Ireland, Spain and Portugal.

The Dollar did fall slightly against the Euro and the Pound in the currency exchange market yesterday, despite some fairly positive economic figures. Existing home sales figures showed an increase for the month of May, with sales figures up to 4.81 million from the previous month’s level of 4.80 million. This took the market growth percentage up from -5.00% to -3.80%, a sign that the housing market is gradually improving.

Today’s US economic docket will focus solely on the Federal Reserve’s interest rate decision, and the accompanying press conference. Exactly as the market will focus on the Bank of England’s minutes release, any shifts in rhetoric or policy stance will affect the currency; with a positive rhetoric from the Fed having the potential to push the GBP/USD exchange rate back down, making it more expensive for UK consumer buying dollars.

Mike Hood
KBRFX

Foreign Exchange Daily Market Update 21/06/11

The Pound closed yesterday lower against the Euro, but slightly higher against the US Dollar in the foreign exchange market. The GBP/EUR rate opened at 1.1354, but closed trading just under 1.1315; the GBP/USD rate picking up to 1.6206 from the day’s open at 1.6128, a good gain for the Pound, making it slightly more attractive for UK consumers who are buying Dollars. There were no economic data releases from the UK yesterday, so the currency was left open to market movements based on sentiment and news from other world economies.

Today’s UK economic docket will focus on public sector finances; with the monthly figures for public sector net borrowing and public finances set for release. The market will watch closely to see if the UK Government is sticking to it’s pledge to make deep cuts to reduce the overall debt level, but there could well be a knock-on effect that harsh austerity measures will affect overall economic growth.

The Euro managed to regain some strength against the Pound yesterday, even in the face of disappointing economic data. Yesterday saw the release of German producer price figures for May, and with a sharp drop in the month-on-month figure, from 1.0% growth to 0.0%, and also the annual level falling from 6.4% to 6.1%, it would have made sense for the Euro to weaken slightly, but the result was completely the reverse. It may well be that the currency is finding strength from the strong rhetoric from the EU, that it will reach a suitable solution for Greece, with European Commission President José Manuel Barroso insisting that Greece will ‘never’ be allowed to go bankrupt. Barosso drew parallels with the global financial crisis that started with US banking giant Lehman Brothers going bust; and stated ‘’A country going bankrupt is much more delicate than a bank that would affect all EU members. No, we should never allow a country to go bankrupt.’’ Whilst the Euro continues to find strength, it will make it more expensive for UK consumers who are buying Euros.

Today’s economic docket from Europe contains the highly influential ZEW Economic Sentiment surveys for Germany and the overall Euro-zone. The ZEW survey conveys the opinions of select financial experts on the direction of inflation, interest rates, exchange rates, and the stock market over the next six months, and any shock result in its findings does have the potential to strengthen or weaken the European currency. EU finance ministers are also still working hard to try and produce solution to Greece’s debt woes, and the currency exchange market may take direction from the outcome of this.

The US Dollar weakened against the Pound throughout yesterday, and with no economic data to support the Greenback it also fell sharply against the Euro. The EUR/USD rate peaked at 1.4314, up from the morning’s open at 1.4203.

The economic docket from the US today is comprised solely of housing data; with existing home sales figures for May set for release. Sales are expected to drop, both annually and month-on-month, and in a market that is still fairly weak in the US, it is not a positive sign for the overall economic picture, and could weaken the Dollar slightly on release.

Mike Hood
KBRFX