Daily Foreign Exchange Market Update

Yesterday in the foreign exchange market the Pound saw some losses against the Euro but some gains versus the US Dollar. The GBPEUR rate opened the day at 1.1680 and closed out at 1.1646 showing not a great deal of movement yesterday. The GBPUSD rate opened the day at 1.5094 and hit a daily high of 1.5144 early in the morning before it weakened slightly across the day, closing out at 1.5112. We also saw some gains in the Euro against the US Dollar yesterday with the EURUSD rate opening at 1.2922 and closing out at 1.2975.

Yesterday was a quiet day for data release with only Rightmove house prices being released which saw an increase of 1.2%.

Today we have already seen CPI (inflation) for Feb with the figure increasing by 2.8%, more than the Bank of England's target rate of 2.0%. Later today Cyprus' Parliament will vote on the Deposit Levy for the EU bail out.

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 the Pound gain against the Euro but fall in value against the US Dollar. The GBPEUR rate opened the day at 1.2290 and lost ground across the first half of the day, hitting a daily low of 1.2271 at midday; it then gained strength over the latter part of the day to close out at a daily high of 1.2318. The GBPUSD rate opened the day at a daily high of 1.6312 but then fell throughout the day before it closed out at a daily low of 1.6254. Yesterday Manufacturing PMI was released and came out at 51.4, higher than the predicted figure of 49.1 showing a level of expansion in the manufacturing sector. Today the only piece of information set to be released from the UK is the PMI results for the construction sector which is set to come out at 49.5, slightly lower than the previous figure of 49.3 but still below the 50 level.

Yesterday the Euro lost ground against the Pound and the US Dollar in the foreign exchange market with the EURUSD rate opening at 1.3273, hitting a daily high of 1.3291 just after the open and closing out the day at a daily low of 1.3195. German CPI for December was the only figure to come out of the Eurozone yesterday was the CPI figure which was slightly higher than expected, 2.1%. Today there will be no data from the Eurozone.

The US Dollar gained against both the Pound and the Euro in yesterday’s market session off the back of the news that the Congress agreed a deal to stop the large tax increases and spending cuts that were due to come into effect. Initial jobless claims will be released later today with the figure set to be 356K, higher than last weeks figure of 350K.

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

Daily Foreign Exchange Market Update

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

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

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

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

Daily Foreign Exchange Market Update

Yesterday the Pound saw gains against both the Euro and the US Dollar in the foreign exchange market. The GBPEUR rate opened at a daily low of 1.2305 and peaked mid-morning to 1.2332 before closing out the day lower at 1.2325. The GBPUSD rate opened at 1.6037, the lowest point of the day but gained strength across the day to close out at a daily high of 1.6102. Manufacturing PMI results were released yesterday with the figure coming out slightly higher than expected, at 49.1, but still below the 50 mark showing a contraction in that sector. It has not gone over the 50 mark since May of this year. Today the PMI for construction will be released and is set to come out slightly lower than before, at 50.7, but still showing an expansion in the construction industry.

The Euro saw losses against both the Pound and the US Dollar during yesterday’s market session. The EURUSD rate opened at 1.3032 and drifted to a daily low of 1.3026 mid-morning. It then gained some strength and hit a daily high of 1.3076 just before it closed out the day at 1.3066. Yesterday Spanish and Italian Manufacturing PMI were released and both saw a contraction in that industry. This morning we have already seen Spanish unemployment change be released and coming out much lower than expected at 74.3K, compared to the analysts’ predictions of 90K. Euro-zone Producer Price Index (PPI) will be released later showing the average change in selling prices received by domestic producers for their goods and services.

The Dollar saw losses against the Pound but gains against the Euro in the foreign exchange market yesterday. Yesterday Manufacturing PMI was released from the US and it came out lower than expected, 49.5 compared to the predictions of 51.5, the first time it has dropped below the 50 level since September. There will be no data released from the US 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

In the foreign exchange market yesterday we saw the Pound lose ground against the Euro but gain against the US Dollar. The GBPEUR rate opened at a daily high of 1.2456 and lose momentum throughout the day before it hit a daily low of 1.2421 in the afternoon, closing out the day at 1.2433. The GBPUSD rate opened the day at a daily low of 1.59 and gained strength throughout the day to close out at a daily high of 1.5935. The main news coming from the UK yesterday were the results of the public sector net borrowing, the amount of new debt held by the government. The figure came out much lower than before, 6.5B compared to the 9.9B last month. There will be no data coming from the UK today.

The Euro gained against the Pound but saw losses against the US Dollar in the foreign exchange market yesterday. The EURUSD rate opened at a daily low of 1.2765 and gained throughout the day to close out at a daily high of 1.2816. There was no data released from the Euro-zone yesterday but today has already seen German PMI be released, up to 46.8 from 46 last month. Euro-zone PMI has also been released, up slightly from 45.7 to 45.8.

The US Dollar weakened against both the Euro and the US Dollar in the foreign exchange market yesterday. This came off the back of jobless claims which came out higher than expected, down from 451K to 410K. Today is Thanksgiving in the US, a public holiday, so no data will be released.

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

Daily Foreign Exchange Market Update

Last week saw the Pound lose ground against the Euro and the US Dollar in the foreign exchange market. The GBPEUR rate opened the week at 1.2519, falling throughout the first half of the week before hitting a weekly low of 1.2453 on Wednesday morning. It then quickly gained ground to reach a weekly high on Thursday afternoon at 1.2561 before closing the week out slightly lower at 1.2514. The GBPUSD rate opened at a weekly high of 1.6013 before losing strength throughout the week and closing at a weekly low of 1.5906. Last week there were several pieces of data coming out of the UK, the most important being the Bank of England’s decision to keep the base rate and asset purchase target the same at 0.5% and £375B respectively. As well as this PMI for services was released which shows the level of business conditions in the services sector, it was worse than expected, coming out at 50.6 compared to the 52.0 predicted.

This week will see CPI (inflation) be released, showing the change in prices for retail goods, the Bank of England’s key measure on inflation and is expected to come out slightly higher than before at 2.4% Jobless claims will also be released showing the change in the number of people claiming unemployment-related benefits; the previous month’s figure was -4K and this month it is set to come out at -5.1K, a better result.

The Euro gained against the Pound but lost strength against the US Dollar during last week’s market session. The EURUSD rate opened the week at 1.2792 before moving to a weekly high of 1.2868 on Wednesday morning. It then weakened throughout the latter half of the week, dropping to a weekly low of 1.2689 on Friday afternoon, closing the week out slightly higher at 1.2715. Last week saw Spanish unemployment change be released, coming out at 128.2K, much higher then the 90.3K predicted, the highest since February, bad news for the Spanish job market. Mario Draghi spoke in a conference regarding the state of the Euro-zone economy. He stated that he expected inflation to fall below 2% in the next year even though unemployment is high and economic activity is week. He also said that the actions of the ECB should build confidence in the short term but only actions of the Government can build confidence in the long term. On Thursday it was announced that the ECB would keep their base interest rate at 0.75%.

This week will see most of the economic data come from Germany, with the German ZEW survey on economic sentiment, a good medium term forecast of the German economy being released on Tuesday, the result set to be -10, better then the previous result of -11.5. Thursday will see Germany release their third quarter GDP results, the figure set to be 0.1%, lower then the second quarter result of 0.3%. The Euro-zone third quarter GDP figure will also be released with the economy set to be seen to contract by 0.1% this quarter, slightly better then the second quarter where it contracted by 0.2%.

The US Dollar gained against both the Pound and the Euro in the foreign exchange market last week. Unemployment claims came out a lot better then expected, 355K compared to the 367K predicted, some good news for the US jobs market. The University of Michigan consumer confidence figure also came out higher then expected, 84.9 compared to 82.9, the highest figure we have seen since July 2007, very good news for the economy. The most significant figure coming out of the US this week is year on year CPI (inflation) which is set to fall slightly from 2.1% to 2%, not a great deal of change for inflation.

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

Daily Foreign Exchange Market Update

Yesterday in the foreign exchange market the Pound saw some gains against the Euro but a slight loss in strength against the US Dollar. The GBPEUR rate opened at 1.2519 before quickly dropping to a daily low of 1.2508 soon after the opening bell. It then gained some strength across the rest of the day and peaked just after lunch to 1.2561, closing the day out slightly lower at 1.2540. The GBPUSD rate opened the day at 1.5984, dropping mid-morning to a daily low of 1.5929 before gaining strength in the first hour of the afternoon, peaking to a daily high of 1.6005, closing the day out slightly lower at 1.5977. Yesterday the main news was that the Bank of England will keep the base rate at 0.5% and the asset purchase target at £375B, as expected by analysts as last month third quarter GDP came out at 1%. Today will be a quiet day with no data being released from the UK.

The Euro weakened against the US Dollar and the Pound during yesterday’s market session. The EURUSD rate opened at 1.2767, a daily high and lost ground during the first few hours of trading, dropping to 1.2719, closing slightly high at 1.2740. Like the UK the main data from the Euro-zone yesterday was the fact that the ECB decided to keep the main interest rate at 0.75%. Today will see various pieces of information being released, the main being German CPI (inflation) which is expected to remain at 2.0%, in line with previous results showing a steady rate of inflation in Germany.

The US Dollar gained some ground against the Pound and the Euro in the foreign exchange market yesterday. The most significant piece of data from the US yesterday were the unemployment claims which were better than expected, 355K compared to the predicted 367K showing a lower rate of people claiming unemployment insurance. Today will see the University of Michigan release their consumer sentiment results which assesses the confidence of consumers within the economy based on personal finance, business conditions and purchasing power. The figure is calculated by subtracting the percentage of unfavourable replies from the favourable ones and this month it is set to come out at 82.9, slightly higher then last months result of 82.6.

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

Daily Foreign Exchange Market Update

Yesterday the Pound strengthened against the Euro and the US Dollar in the foreign exchange market. The GBPEUR rate opened the day at 1.2466, gaining strength over the first few hours of trading, peaking to a daily high of 1.2494 mid-morning. Throughout the rest of the day it then lost strength, dropping to a daily low of 1.2441 early afternoon, closing slightly higher at 1.2474. The GBPUSD rate opened down at a daily low of 1.6131, it then gained ground and peaked at midday to a rate of 1.6175 but then slipped across the rest of the day to close out at 1.6136. It was a quiet day for data release in the UK with the most significant piece being Nationwide house prices year on year for October showing the change in selling price of homes with mortgages backed by Nationwide and is the leading indicator of the housing industry’s growth because rising house prices attract investors and spur industry activity. Today will see Construction PMI being released, a leading indicator of economic health as it reacts quickly to market conditions. It came out this morning at 50.9, above the level of 50 which shows an expansion in the construction industry.

The Euro lost ground against the Pound but strengthened against the US Dollar in yesterday’s market session. The EURUSD rate opened the day at 1.2939, falling sharply to a daily low of 1.2924 early morning, before quickly gaining back the strength and peaking to 1.2983 at midday, closing the day lower at 1.2935. The main piece of information coming from the Euro-zone yesterday was Ireland’s unemployment rate for October which stayed at 14.8%, a much higher result then the rate of 4.5% seen pre-banking crisis in June 2007. Today has seen Euro-zone PMI for manufacturing come out with the result only slightly better then the previous result, 45.4 compared to 45.3 last month, still below the headline figure of 50.

The US Dollar weakened against the Pound and the Euro in the foreign exchange market yesterday. This came off the back of consumer confidence and ISM Manufacturing results that were better than expected. Today will be a big day for the US economy with jobs reports coming out later today. The unemployment rate is set to slightly increase from 7.8% to 7.9% and the change in non-farm payrolls which is actually set to rise from 114K to 125K.

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

The main news yesterday was that of the Pound falling to a 4 month low against the Euro in the foreign exchange market showing it is not a good time to be buying Euros. The GBPEUR rate opened at 1.2281, gaining strength during the first half of the day to reach a daily high of 1.2310. It then fell throughout the rest of the day, reaching a daily low of 1.2247 an hour before the close of trade, closing slightly higher at 1.2269. The Pound also lost ground against the US Dollar during yesterday’s market session. The GBPUSD rate opened at 1.6036, peaking early, a few hours into trading to reach 1.6053, before falling throughout the rest of the day to close out at a daily low of 1.6026. There was no data released from the UK yesterday and only one piece will be released today. BBA loans for house purchases in September will come out, the number of loans approved for house purchases in the month with the figure set to increase from 30,533 to 30,840, showing an increase in confidence which is healthy for the economy. However, Mervyn King, the Governor of the Bank of England will speak at the Chamber of Commerce today in Cardiff. As Governor of the Bank of England he has more influence over the Sterling than anyone else so analysts will scrutinize the speech to try and predict how the Pound will fare against foreign currencies.

Yesterday saw the Euro gain against the Pound and the US Dollar during the market session with the EURUSD rate opening at 1.3057 and closing at 1.3062. It fluctuated throughout the day, falling early morning to a daily low of 1.3025 but peaking an hour before the close of trade at 1.3083. The only data to be released from the eurozone yesterday was the government debt/GDP ratio for 2011. This ratio shows the amount of debt a eurozone country’s government has compared to the GDP of that country. At the end of 2010 the ratio was 87.2% and at the end of 2011 it increased slightly to 87.3%, not a great deal of difference, still a very high figure.

Today, eurozone consumer confidence will be released, data collected from a range of surveys on various topics including personal finance, the job market and future expectations. The previous figure was -25.9 and today’s figure is set to come out at -25.8, slightly better but still showing a very low level of confidence within the eurozone area.

The US Dollar gained strength against the Pound but weakened against the Euro during yesterday’s foreign exchange market session. This came off the back of no data being released from the US yesterday, the only news being the third and final US presidential debate, the election being dubbed the economic election where the main topic of conversation was foreign policy including defence spending and the trade partnership with China. No data will be released from the US 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 19/07/11

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The Pound ended yesterday lower against both the Euro and the US Dollar in the foreign exchange market. The GBP/EUR rate fell from the morning’s open of 1.1461 down to 1.1408 by the close. The GBP/USD exchange rate also dropped, from 1.6099 down to 1.6024 by the end of the day. There was no economic data released from the UK yesterday to affect movements in the currency market; but the ongoing scandal regarding News Corp and News International does have some political connotations; and with some of the accused parties facing the UK Parliament today the market could well be affected should there be any high-profile political casualties as a result of the House of Commons enquiries.

The Euro ended the day almost unchanged against the US Dollar; the EUR/USD exchange rate opening and closing at levels of 1.4045. There was also no economic data released form Europe yesterday to affect movements in the foreign exchange market.

Today will see the release of German ZEW Economic Sentiment survey results, with the market forecasting a drop in the overall figure, from -9.0 to -12.5; a result that could be detrimental to the Euro, and see the currency weaken against both the Pound and the US Dollar.

The US Dollar did manage to pull back slightly against the Pound yesterday, the GBP/USD rate pulling back to 1.6024 from just below 1.6100. The economic data from the US yesterday wasn’t entirely positive though, with Net long-term TIC flow figures for May showing that less capital moved into the US market for stocks/shares and bonds etc.; the figures showing a level of $23.6billion down from the previous months level of $30.6billion, also well below analysts estimates for an increase in the level to $40.0billion.

The US economic docket for today will focus on the housing market, with building permits figures for June expected to drop slightly, but housing starts are forecast to show a slight increase for the month of June. The housing market in the US, as is in the UK; is still very weak, and any positive data could well be beneficial to the US Dollar in the currency exchange market.

Mike Hood
KBRFX

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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 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 31/05/11

The British Pound opened the week a touch above 1.65 against the US Dollar, following a fairly positive week of economic data in the UK, which saw Consumer Confidence rise by the second highest level seen since 1993. Add to this an increase in house prices, Government borrowing dropping by record levels, and the release of 1st quarter Gross Domestic Product (GDP) figures showing 0.5% growth, it has certainly helped the exchange rate no end.

It is unlikely though, that this week will follow a similar pattern, albeit due to the fact that the UK economic calendar is decidedly empty. Apart from Purchasing Manager Index figures for manufacturing, construction and services being released on consecutive days from Wednesday, the foreign exchange market will be more than likely to take direction from the European and US economies, and broader-based risk sentiment.

The Euro continues to face severe pressure, but has found support as an article published by the Wall Street Journal, suggested that Germany is considering ‘a rescheduling of Greek bonds to facilitate a new package of aid loans’, as it seems that the Euro-zone’s strongest economy accepts that without their help, the possibility of Greece running out of funds in the next month could have disastrous consequences for the rest of the member states.

In terms of monetary policy, the currency exchange market seems to be speculating that the chances of another rate-hike from The European Central Bank (ECB) in June are rapidly diminishing. With debt contagion worries still weighing heavily on policy-makers mind’s, the realisation is that whilst raising the interest rate once again would see a short term boost for the Euro currency, the knock-on effect could be a complete wipe-out of growth across the region.

The US Dollar could well benefit from any potential fall-out in Europe, and signs of weakness in the UK. The greenback is seen as one of the world’s ‘safe-haven’ currencies, and the longer there is indecision in regards to the EU, the IMF, and even the Bank of England, the dollar may well see welcome flows which benefit the exchange rate.

This coming week will be data-heavy for the US, so expect any surprises to make big moves in the foreign exchange market. Tuesday will see the release of Consumer Confidence figures for May, moving on to ISM Manufacturing figures on Wednesday, and concluding with the potentially market-moving Non-Farm payroll figures on Friday. All of these data events are seen by the market as having high-importance in terms of the overall health picture of the US economy, particularly key components such as the manufacturing and labour markets, so traders will be exercising caution, looking for any surprises.

Foreign Exchange Daily Market Update 23/05/11

Last week's mix of economic figures produced some choppy price action in the currency exchange market as far as the British Pound was concerned. The currency saw gains on Tuesday when it was announced that Consumer Prices rose by 4.5% year-on-year to beat analysts' expectations for a 4.1% increase. The higher than forecast inflationary data stoked expectations that the Bank of England may raise interest rates later this year, and that policy makers will have take a more hawkish stance towards monetary policy. However on Wednesday, the MPC's minutes showed that the vote to maintain the current base rate of 0.5% remained unchanged at 6-3, with Andrew Sentance, Martin Weale and Spencer Dale being the three to vote for a rate hike. Despite the minutes showing that inflation is expected to hit 5%, most policy makers saw risks to the economic recovery if rates are raised too quickly. As rate hike expectations faded the Pound slipped to this week's low of 1.6105 against the Dollar. The Pound's decline was further aided by April's jobless claims rising by 12,400 in April instead of remaining unchanged as economists had expected. But the Pound didn't remain subdued for long, and received a welcome boost on Thursday with higher than expected retail sales figures for April showing month-on-month growth of 1.1% ahead of the estimates for a mere 0.8%.

A light week of economic figures lies ahead for the UK, which doesn't start until Tuesday when April's Public sector finances are published. Forecasts call for government borrowing to fall to £4.4 billion down from £16.4 billion and the outcome has the potential to lift the Pound if forecasts are correct. The big figure of the week though is the Office for National Statistic's preliminary reading for first quarter GDP. Economists believe that the UK's growth rate will stagnate at 0.5%. If this forecast is correct, it will mean that the UK has not grown since the third quarter of last year, and will most likely result in Pound's decline.

The Euro put in a strong performance for much of last week, making gains against both the US Dollar and the Pound. At the start of the week, a summit of European finance ministers was being held in Brussels. Finance ministers 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. With regards to Greece, the summit asked the nation to sell assets and deepen its spending cuts in order to win an extension of its aid package to €110 billion. However the Greek debt crisis has caused some controversy among member nations, as there is some discussion over whether debt restructuring is even a possibility for Greece. The uncertainty over Greece's future meant that on Friday the Euro slipped massively from a high of 1.4345 to below 1.42 against the US Dollar, while against the Pound the Euro ended the week at 1.1476.

On the data front, the single-currency benefited early on from a better than expected Euro-zone trade balance surplus in March, with a figure of €2.8 billion, rising from the previous reading of - €3 billion. On Wednesday the ZEW economic sentiment gauge underperformed for both Germany and the Euro-zone but the figure still remained positive. Lastly, Germany's Producer Price Index grew at a pace of 1.0% month-on-month beating forecasts for 0.6% and lifting expectations that the ECB may raise interest rates for a second time this year.

European figures dominate the foreign exchange market this week by sheer volume alone, the big figure of which being the final revisions to Germany's first quarter GDP. The preliminary reading of 1.5% is expected to remain unchanged. However while Germany's economic growth should prove to be a boost the value of the Euro there are a number of economic factors that point toward a weakened outlook for the region. On Monday Purchasing Manager Indexes (PMI) for Germany and the Euro-zone point to slowing growth in both manufacturing and services sectors, on Tuesday Germany's IFO business sentiment readings are also expected to tick lower from April. Further to this, Wednesday will see Germany's forward looking consumer confidence survey by market researcher GfK, with positive sentiment forecast to fall in June, and on Friday the Euro-zone economic confidence survey for May is expected to follow down a similar path. Potentially this week could lead the Euro lower if confidence in the region fails.

Housing market woes weighed on the Dollar on two separate occasions in the last week. On Tuesday both building permits and housing starts for the April came in below estimates with a contraction of 4.0% and 10.6% respectively. Thursday's existing home sales figures for the same period showed a 0.8% contraction. Further to this May's Empire manufacturing figure, April's Industrial Production, the Philadelphia Fed index and last the April's Leading Indicators composite index all pointed to a weaker production outlook for the US. However, by Friday, despite a lack of economic data, the Dollar regained some ground against the Euro as sovereign debt fears made room for gains to be made against the single-currency.

US housing data will be on the cards once again this week when on Tuesday April's new home sales are expected to slow to 1.7% growth down from 11.1% in March. However with last week's housing data coming in below estimates, there is a very good chance that traders will see the same outcome. This will then be followed by Friday's pending home sales which are set to decline by 1.0% month-on-month. Should this happen then the Dollar should weaken against the other majors. April's forecast contraction in Durable Goods Orders could also weigh on the Dollar, as well as the expected decline in house prices in March. By Thursday the Dollar could finally get some respite when the annualized first quarter GDP figure crosses the wire showing that the economy grew by 2.2%. Lastly income and spending estimates may leave the Dollar trading lower yet again, as forecasts call for the growth of personal income to slow to 0.4% from 0.5% and for spending slow to 0.5% down from 0.6%.