Daily Foreign Exchange Market Update

Last week in the foreign exchange market we saw the Pound finally gain some strength against the Euro and the US Dollar. The GBPEUR rate opened the week at 1.1483 and dropped to a weekly low of 1.1371 mid-week before it strengthened over the back end of the week, hitting 1.1624 before closing out the week at 1.1583. The GBPUSD rate opened the week at 1.4936 and like the previous rate it hit a weekly low of 1.4831 mid-week before closing out the week at 1.5131. It was a quiet week for data release from the UK with the main piece of data being industrial and manufacturing production which both fell by 2.9% and 3.0% respectively.

The US Dollar also weakened against the Euro last week with the EURUSD rate opening at 1.3008 and closing out at 1.3059. The main news from the Eurozone last week was their CPI (inflation) result which increased by 1.8% as expected. US retail sales came out of the US last week better than expected at 1.1%. The US CPI data also was released with the figure coming out slightly higher than expected at 2.0%.

Over the weekend we had some significant news come out of Cyprus where, due to an EU bailout deal, bank customers have to pay a levy of up to 9.9% on their savings. Savers with up to €100K in their bank will be charged a one-off amount of 9.9% of the amount in their account and those with under €100K will see a 6.7% charge implemented; this deal is expected to raise nearly €6Bn for Cyprus.

This week is an important week for the UK as the Chancellor, George Osborne will present the 2013 Budget to Parliament on Wednesday. We will also see UK jobless claims change and the unemployment rate be released with the rate for the 3 months up to January expected to remain at 7.8%.

On Wednesday the FED’s FOMC will also meet and decide whether or not they want to change their base interest rate with no change expected; staying at 0.25%.

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

The Pound saw itself weaken against the Euro and the US Dollar in the foreign exchange market yesterday. The GBPEUR rate opened at 1.2422, a daily high, and lost strength across the day before closing out at a daily low of 1.2374. The GBPUSD rate opened at 1.5964 and quickly gained strength, hitting a daily high of 1.5979 early morning. Throughout the rest of the day it weakened before closing out at a daily low of 1.5930. There was no data released from the UK yesterday and none will come out today.

The Euro gained strength against both the Euro and the US Dollar during yesterday’s market session. The EURUSD rate opened the day at a daily low of 1.2851 before hitting a daily high of 1.2899 at midday, closing the day out at 1.2874. Yesterday we saw German, French and Euro-zone PMI all come out better than expected, some good news for once. Today German GDP figures have been released with the year-on-year and quarter-on-quarter figures coming out in line with predictions, 0.4% and 0.2% respectively. Today there is also a Euro-zone economic summit where heads of state will meet and discuss future plans for Spain and Greece.

The US Dollar saw some gains against the Pound but weakened against the Euro in the foreign exchange market yesterday. There was no data from the US yesterday as it was Thanksgiving and none will be released 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

During yesterday’s market session the Pound weakened against the Euro and the US Dollar with the GBPEUR rate opening at 1.2504, a daily high and fell throughout the day before closing at a daily low of 1.2469. The GBPUSD rate opened at 1.5985, dropping early morning to a daily low of 1.5964, peaking around lunch time to a daily high of 1.5989 before closing slightly higher at 1.5983. Yesterday was a quiet day for data release in the UK with the most significant piece being the month on month Halifax house price index which shows the change in prices of homes financed by HBOS. The previous figure was -0.4% and the actually figure missed the 0.5% forecast, coming out at -0.7%, showing lower activity in the housing market. There will be no data coming out of the UK.

The Euro gained strength against both the Pound and the US Dollar in the foreign exchange market yesterday with the EURUSD rate opening at a daily low of 1.2784 and closing out at a daily high of 1.2818. Yesterday the Bundesbank released the results for German factory orders which shows the change in total value of new purchase orders placed with manufacturers. The result came out much lower then expected, -3.3% compared to -0.3% showing that there is less activity in the manufacturing sector. Today the Greek government will meet to discuss austerity plans. They will vote and decide on whether the measures in the ‘medium term financial strategy 2013-2016’ will be implemented. There are expected to be a wave of 48 hour public sector strikes against wage and pension cuts but Prime Minister Antonis Samaras is expected to marginally win support for these austerity cuts.

The US Dollar gained some strength against the Pound but lost some against the Euro during yesterday’s market session. However this morning the Dollar quite a bit of ground against the Pound and the Euro due to the announcement of Barack Obama holding Presidency for the next four years.

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 27/02/12

The Pound closed out last week having lost considerable ground against the Euro; but almost unchanged versus the US Dollar in the foreign exchange market despite a week of choppy trading. The GBP/EUR exchange rate which opened on Monday at 1.2010; fell across the course of the week, to trade down at 1.1786 by Friday’s close – with the GBP/USD exchange rate also taking a sharp drop from 1.5851 at Monday’s open, dipping down to 1.5648 mid-week before recovering to trade back at 1.5873 by the close of play on Friday. The currency was not helped by the release of the Bank of England’s minutes from its last policy meeting; which showed that policy-makers were split over the size of the stimulus required by the UK economy, leaving the door open for the central bank to add further QE in May. The minutes also revealed that two policy-makers argued there was a risk of a prolonged period of depressed demand that would cause inflation to fall materially below target in the medium term. However, most MPC members argued a bigger increase than £50bn "risked sending a signal that the committee thought the economic situation was weaker than it was".

The week ahead will see some significant data released from the UK; most notably Tuesday’s Nationwide house price numbers, and Wednesday’s GfK consumer confidence survey results; which have the potential to spark volatility within the currency exchange market should there be any shock results.

The Euro gained considerable ground against both the Pound and the US Dollar in the currency exchange market last week; with the currency getting a large boost from the news that Greece has secured a second bailout worth approximately 130 billion Euros, and has won a 53.5% reduction in its debt burden to private creditors. This enabled the EUR/USD exchange rate to move up sharply from Monday’s open at 1.3197, to trade up at 1.3467 by Friday’s close. With Euro-zone countries seemingly ‘rallying’ round to agree the package for Greece, it has brought some sense of confidence back into the currency; but the larger problem still remains that these measures may not be enough to secure the longer-term (beyond 2-3 years) future of the country.

The week ahead is packed full of Euro-zone data, which could affect the currency markets. Tuesday will see the release of German CPI (inflation) figures, along with Euro-zone economic, industrial, services, and consumer confidence numbers. Wednesday will turn to the labour market, with the release of the latest German unemployment figures. Thursday will come back to inflation once again, but this time it is price-growth across the whole of the Euro-zone that will come under scrutiny; with the week closing out on Friday with Euro-zone producer price results.

The US Dollar managed to make good mid-week gains against the Pound, after the sombre Bank of England minutes, and positive Euro-zone news, but soon fell back; losing ground overall against the Euro throughout the week. This was despite positive data from the US, with existing home sales showing a good gain for the month, along with February’s University of Michigan confidence numbers also showing a positive upturn.

There is plenty of data scheduled for release from the US this week, with the market focus more than likely to be on Wednesday 4th quarter GDP numbers. Aside from this, Tuesday’s durable goods orders, and Thursday personal consumption and ISM manufacturing figures could give the Dollar some direction within the market.

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 13/09/11

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The Pound remained relatively unchanged against the US Dollar during yesterday's trading session leaving conditions less than ideal for buying Dollars. The foreign exchange market bared witness to some choppy trading as the Pound slipped to an early morning low of 1.5790, against its US counterpart, before climbing to its afternoon high of 1.5886. As the European market drew to a close, the GBP/USD exchange rate fell to the day's low of 1.5771 before climbing back to 1.5853 by the close of the US market. Despite a lack of meaningful economic data from both Britain and the Continent, the Pound lost ground against the Euro to see the GBP/EUR exchange rate fall from its high of 1.1714 to 1.1574, however the market was still favourable for buying Euros.

This Tuesday the UK is scheduled to see August's Consumer Price Index (CPI) announced with expectations calling for an annual increase from 4.4% to 4.5%. The predicted outcome could potentially bolster the Pound's trading power against the other currencies. Along side the CPI's release, July's visible trade balance figures are expected to show that the UK's trade deficit has shrunk since June. Just like with the release of the CPI reading, the Pound could gain strength if trade deficit narrows in line with expectations.

The Euro gained ground against both the British Pound and the US Dollar during Monday's session, with currency exchange market seeing the EUR/USD exchange rate picking up from 1.3554 to a high of 1.3694. The Euro's reversal could be attributed to ECB President Jean-Claude Trichet's comments following the Global Economy Meeting held in Basel, Switzerland. The European Central Bank (ECB) President gave a show of strength when he announced that European central banks were "united" in guarding against inflationary and deflationary risks. He also stated that all Europeans "expect the Greek government to fully deliver on its commitments," and added that there is "superior interest" in observing that satisfactory results take place in Greece.

So far this morning, the Euro retraced some of its gains against the Pound to see the GBP/EUR exchange rate rise above 1.16, while against the US Dollar the exchange rate slipped to 1.3597. The Euros decline could be attributed to the better than expected growth rate in the French CPI reading for August. Normally higher CPI readings would be positive for the currency but considering that the ECB is has indicated that it may look to slash interest rates, price growth would only be a hindrance to the region.

With little economic data out from the US on Monday, the Dollar remained unchanged against the Pound, although the currency pair did test the lower ranges twice on Monday, but this was short lived as the exchange rate corrected itself to levels above 1.58. The same could not be said for the Dollar's performance against the Euro which overpowered the Dollar to see the Euro rate make gains.

Looking ahead the most significant piece of data to come out from the US will be August's Monthly Budget Statement which economists forecast to increase from a budget deficit of $90.5 billion to $132 billion. The outcome will likely have a negative impact on the US Dollar when the data is released at 19:00 BST.

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

Foreign Exchange Daily Market Update 12/09/11

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The Pound finished last week having managed to make an impressive gain against the Euro in the foreign exchange market; but having fallen heavily against the US Dollar. The GBP/EUR exchange rate which opened the week at levels of 1.1413, stayed fairly range-bound until Thursday’s Bank of England and European Central Bank (ECB) meetings. Following an extremely dovish outlook from the ECB, the Pound took full advantage of Euro-weakness and the exchange rate moved up rapidly, closing on Friday at 1.1617. Aside from the Bank of England’s expected decision to keep rates and asset purchases on hold; the overall picture from the week’s UK economic data was negative though. PMI services data showed a downturn in August, from 55.4 to 51.1; Industrial and Manufacturing production both dropped annually, and producer price index figures showed no change annually, but a drop monthly from 0.3% to 0.1%.

The week ahead does contain a few pieces of high-level market data from the UK. Tuesday will see the release of CPI (inflation) figures, with the market forecast for price-growth to have increased, both annually and month-on-month; which could potentially put the Bank of England in a difficult position in terms of interest rate policy. Sustained levels of inflation would put pressure on the central bank to raise rates; but with the economy still in a fragile state, and the central bank’s continued view that the current levels are temporary, it will be interesting to see how the market reacts. Wednesday will put the UK’s labour market under close scrutiny, with the release of jobless claims change for August, along with the latest claimant count rate figures, and the latest snapshot of the headline UK unemployment rate. Thursday see’s retail sales figures cross the wires, with the week closing out with Friday’s earl morning consumer confidence figures. The Pound does have the potential to continue its drive against the Euro this week; but is more likely to be stoked by increased turmoil and worsening sentiment in the Euro-zone as opposed to large amounts of positive data from the UK.

The Euro took a hammering in the currency exchange market last week, losing huge ground against both the Pound and the US Dollar. There were a number of negative data releases from Europe, namely a downward revision in Euro-zone 2nd quarter GDP from 1.7% to 1.6%, and hugely disappointing factory orders data from Germany. Figures from Germany also showed a drop in the nation’s trade surplus; indicating a slow-down in export activity; which could be attributed to an overly-strong currency, a possible damaging effect of overly-strong policy and rate-hikes from the ECB over the previous months. The biggest risk event though for the Euro was the ECB’s interest rate meeting on Thursday, at which the ECB President Jean-Claude Trichet took a hugely dovish stance; highlighting the downside risks to economic growth, with a shift in over-night index swaps indicating the market now expects the central bank to make rate-cuts by the end of the year. The currency suffered instantly, the EUR/USD exchange rate moving from the week’s open at 1.4141 down to 1.3649 y Friday’s close; following the rate meeting.

This week will see hardly any data from Europe cross the wires; but there is still potential for the data to affect the market heavily. Euro-zone industrial production figures will be released on Wednesday, with any further drop in levels set to increase the pressure on the currency. Thursday will be a major day in terms of risk; with the release of Euro-zone CPI (inflation) figures for August, and also the ECB will publish its latest monthly report. Any rise in price-growth will put pressure on the ECB; which is in no position to make further rate–hikes to control inflation. The ECB’s monthly report is likely to give more insight into policy-makers views on current economic conditions, and the outlook for next few months. The Euro is facing headwinds already this morning with news crossing the wires that Germany’s Chancellor Angela Merkel is set to pass comment on the current Greek debt situation; and the media expectation being that the nation (Germany) is growing increasingly tired of bailing-out weaker nations, and that Germany may be set to ‘wash it’s hand’ of any involvement; which would be disastrous for the Euro-zone.

The US Dollar continued to benefit heavily from turmoil in Europe last week, gaining across the board; its status as a safe-haven currency helping to push the GBP/USD exchange rate back down from the week’s open at 1.6142 to 1.5857 by Friday afternoon. Risk sentiment was the main driver for the Dollar; with minimal economic data crossing the wires from the US during the week. ISM non-manufacturing figures for August showed a slight increase in activity from 52.7 to 53.3, and US trade balance figures showing a decrease in the nation’s trade-deficit. The release of the Federal Reserve’s beige book economic survey showed little in terms of positive news, with most of the Fed’s twelve districts reporting distinctly average conditions for retail sales and housing, with some districts showing contractions in activity.

The US economic docket will see some significant data released this week. Tuesday will see the US’s monthly budget statement cross the wires, followed by the market-moving advance retail sales figures on Wednesday, along with business inventories and producer price figures. Thursday will focus on price-growth, with the release of the latest CPI (inflation) figures, as well as industrial production, and the latest Philadelphia Fed Index. The week will round off on Friday with the University of Michigan confidence survey; with the overall market view for the Dollar to maintain it’s gains amongst what will be a turbulent week for Europe.

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

Foreign Exchange Daily Market Update 09/09/11

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The Pound made a sharp reversal in the foreign exchange market yesterday; finishing the day trading higher against the US Dollar; and having made impressive gains against the Euro. The GBP/EUR exchange rate rocketed up from the morning’s open at 1.1322 to trade at 1.1487 by the end of the day. There was also a small rise in the GBP/USD exchange rate, from 1.5921 at the mornings open to 1.6009 at the day’s close. The main economic event from the UK yesterday saw the Bank of England keep the base interest rate on hold as expected; and also made no change to the asset purchase target. The market will have to wait for the release of the meeting’s minutes to see the full extent of the reasoning behind the decision; and the all-important voting majorities from the Monetary Policy Committee.

This morning has seen the release of producer price figures from the UK; with the result being an increase in the core output level, from 3.4% to 3.6%, some positive news for the UK.

The Euro suffered in the currency exchange market yesterday; falling heavily against both the Pound and the US Dollar; after less than impressive German trade balance figures; and more worryingly, a quite dovish tone from ECB President Jean-Claude Trichet at the ECB’s latest policy meeting; with the President highlighting the downside risks to economic growth, with the market now expecting the central bank to make rate-cuts by the end of the year.

The Euro-zone’s sole important figure for today has already been released this morning, with August’s CPI (inflation) figures form Germany showing an increase in both the annual and monthly level of price-growth; from 2.3% to 2.4% and from -0.1% to 0.0% respectively. This could pose a problem for the Euro-zone as a whole; with the expectation of rate-cuts in Europe increasing, rising inflation will be a difficult situation for the central bank to control.

The US Dollar for the fourth day running gained against the Euro; the EUR/USD rate pulling back further from 1.4061 to 1.5935; the Dollar taking advantage of the worsening outlook in Europe, but the currency lost some of its previous gains against the Pound, with the GBP/USD exchange rate picking back up to above 1.60. The economic data released from the US yesterday saw the US trade balance reduce it’s negative trade deficit slightly; which is positive news for the overall economy; but it may only be a temporary drop, with the previous day’s beige book economic report suggesting that the auto-industry; which is a huge contributor to the US’s economy, has been affected by smaller supply of stock from Japan, which could have been a factor in overall falling import levels.

There are no scheduled economic events from the US today; so the currency will be open to shifts in sentiment and news from the world’s other major economies.

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

Foreign Exchange Daily Market Update 07/09/11

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The Pound had yet another day of disappointing trading against the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate which opened at 1.1420 fell sharply in early-morning trading, and ended the day lower at 1.1393. There was no significant data released from the UK yesterday, with movement in the market coming from other economic news from around the globe.

This morning has seen the release of July’s Industrial and Manufacturing production figures from the UK with the figures showing that industrial production fell both annually and monthly, from -0.3% to -0.7% and from 0.0% to -0.2% respectively, with manufacturing showing an unexpected pick-up from -0.4% to +0.1% monthly, but the annual level still falling from 2.1% to 1.9%.

The Euro did gain some ground against the Pound yesterday, but fell heavily against the US Dollar on the back of a downward revision in 2nd quarter GDP figures for the Euro-zone. With many market participants fearing the possibility of the Euro-zone falling back into recession; a downward amendment to the annual growth rate from 1.7% to 1.6% affected the currency heavily; with the EUR/USD exchange rate falling from 1.4110 at the market open to 1.3997 by the end of the day. There was also disappointment with the release of German factory orders which fell annually from 9.4% to 8.7% and month-on-month quite drastically from 1.8% to -2.8%.

Today will see the release of German industrial production figures, which do have the potential to move the market. Following on from yesterdays disappointing factory order numbers, it would be a blow to the Euro if industrial production were to show decline, as Germany is a nation renowned for its strong industry, and the sector is a huge contributor to overall GDP.

The US Dollar once again continued to press on in the currency exchange market, particularly against the Euro; gaining over a cent on the exchange rate throughout the day. There was also some positive data to back up the ‘flight to safety’ that is seeing funds flow into the Dollar helping it make such good gains; with August’s ISM non-manufacturing figure showing an increase, from 52.7 up to 53.3.

There will be some high-level market data released from the US today; with the release of the latest Federal Reserve Beige Book economic survey, which will give some key insight into economic conditions across the Federal Reserve’s twelve districts. The currency is likely to take direction from any change in the outlook of the report, and there may well be some comment passed form Fed officials on whether they feel that further quantitative easing is necessary to stimulate economic growth.

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

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Foreign Exchange Daily Market Update 06/09/11

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The Pound made a small advance against the Euro; but fell against the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate opened at 1.1413 and after a very choppy day’s trading, close at 1.1418. The sole piece of economic data released from the UK yesterday showed that the PMI services index for August fell; from 51.1 to 50.4; the sharpest slowdown since 2001; but with many analysts attributing the poor performance to the after-effects of last month’s riots, it could well prove to be a temporary drop.

There are no scheduled data releases from the UK today, leaving the currency open to news and events from around the world.

The Euro fell against the Dollar and the Pound yesterday with the currency coming under pressure mainly due to increased fears over the Euro region falling back into recession. A survey of the Euro-zone economy published yesterday by the research group Markit; showed that growth in economic activity across the Euro-zone fell to its lowest rate in almost two years, and also that the combined Euro-zone services and manufacturing PMI fell to 50.7 in August, with business optimism falling significantly in Germany, France, Spain and Italy.

This morning will see the release of the final reading of 2nd quarter Euro-zone GDP, and the Euro could yet face further pressure if there is any downward revision in the numbers. German factory order figures will also cross the wires later on today. With the nation being so heavily reliant on its manufacturing industry; the currency will surely be affected by any unwanted decline in the monthly or annual levels.

The US Dollar is continuing to benefit from uncertainty and debt woes in Europe, gaining across the board despite yesterday being a non-trading day in the US. With no economic data released due to the Labor Day holiday, the currency exchange market took direction from alternate factors from around the globe, and the EUR/USD continued its pullback, moving down from the morning’s open at 1.4141 to 1.4103 by the end of the UK trading day. The Dollar also moved significantly against the Pound, with the GBP/USD exchange rate falling to a 6-week low of 1.6105.

Today will see the release of Augusts ISM non-manufacturing figures from the US; with the market forecast for a slight decrease in the index level; but it may not have too much of a negative effect on the currency, with much larger event risks and sentiment shifts from around the globe.

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Foreign Exchange Daily Market Update 05/09/11

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The Pound finished last week higher against the Euro but lower against the US Dollar in the foreign exchange market. Despite the GBP/EUR exchange rate falling down to a low of 1.1272 on Wednesday, the market closed on Friday with the rate back up at 1.1413. There was only a minimal amount of economic data released from the UK last week, with the overall feeling being slightly negative. Mortgage approvals for July showed a good increase from 48,500 to 49,200 but GfK consumer confidence levels for August showed yet another monthly decline from -30 to -31. PMI manufacturing for August also fell, from 49.4 to 49.0; further reinforcing the current fragile state of the UK’s manufacturing sector.

The week ahead doesn’t contain much more data than the previous week; but the importance of some of the figures set to be released are a lot higher. Thursday will most likely be the focal point of the week for the UK; with the NIESR releasing their latest GDP estimate for August. With economic growth fairly weak in the UK at the moment; should there be any drop below the market forecast for a level of around 0.6%, the Pound could come under severe pressure. Thursday will also see the Bank of England meet to decide on both the base interest rate, and also the asset purchase target. With the last set of minutes released showing more votes towards increasing the asset purchase target; the market will be watching closely to see if there is any hint of a shift towards further quantitative easing; a possibility that is becoming more likely month on month. In terms of the base interest rate; it almost a foregone conclusion that there will be no change, but the market will have to wait for the release of the meeting’s minutes to gain a true gauge of how strong the majority vote is, and also the bank’s current rhetoric.

The Euro faced strong headwinds last week, and fell against both the Pound and the US Dollar. The overall feel of the economic docket from Europe was negative; and may be considered more disappointing with the fact that a lot of weak data was from arguably the Euro-zone’s strongest member state; Germany. With only a minimal improvement in the unemployment change for August, and PMI manufacturing figures from Germany falling sharply, the market saw a shift in sentiment away from the Euro, as the worries of debt-contagion are still firmly in the minds of market traders. Euro-zone consumer confidence figures improved slightly, from -16.6 to -16.5 but still remained near its lowest levels for around three years. The final reading of 2nd quarter GDP from Germany showed no change from initial indications of 2.8%, which caused little reaction in the currency exchange market.

This week will see some high-level market data released from Europe. Tuesday sees the release of the final reading of Euro-zone 2nd quarter GDP; which could make waves in the market should there be any revision to the initial reading. German factory orders will cross the wires on Tuesday, and there is a worry that the currency could fall if there is a decline in the industry that is most key in terms of economic contribution to the German nation. Thursday’s release of German trade balance figures are expected to show a smaller trade surplus, which would indicate a decrease in the amount of export activity, and will stimulate some thoughts within the market that a strong currency may be affecting the international trading ability of the Euro-zone; which could have dire consequences in the long-term. The ECB are also meeting on Thursday; with the central bank expected to make no changes to the key interest rate; and unlike their UK counterparts, there is likely to be some market movement during the post-decision press conference; where ECB President Trichet is almost certain to face questions in regards to the ECB’s current bond purchasing plans, and also his outlook for inflation and economic growth in the coming months.

The US Dollar continued to benefit from its safe-haven status last week, as a combination of worsening sentiment and poor data from the UK and Europe helped the currency to make strong gains across the board. The EUR/USD exchange rate pulled back throughout the week from 1.4529 to 1.4196, a massive gain for the Dollar; which was no doubt helped by increases in personal spending, personal income, and factory orders; which suggested that despite fairly stagnant growth; there are some positive notes within the overall economy. One disappointment though was a huge fall in US consumer confidence for August; with the level plummeting from 59.2 to 44.5. the feeling still remains though that the Federal Reserve are likely to introduce a third round of quantitative easing in the next few months; which despite almost conceding the economy does need further stimulus, should help to increase growth and confidence in the nation.

There is not a large amount of data set for release from the US this week, but with Wednesday’s release of the Federal Reserve’s Beige Book economic survey, and Thursday trade balance data; there is likely to be some sharp movement within the currency markets should there be any unwanted surprises, or further indications of economic weakness.

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

Foreign Exchange Daily Market Update 02/09/11

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The Pound continued to fall against both the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate fell from 1.1347 at the mornings open down to 1.1328 by the days close. The GBP/USD exchange rate followed a similar pattern to the previous day, with a large slide from 1.6230 down to 1.6170 throughout the day. The economic data released from the UK yesterday was disappointing; with Nationwide house prices for August stagnant at -0.4% amid market forecasts for an increase to +0.4%, further enhancing the fragile state of the UK’s housing market. The manufacturing sector also disappointed; with the PMI manufacturing index for August falling from 49.4 to 49.0.

There are no scheduled data releases from the UK today, leaving the currency open to shifts in risk sentiment and news from the world’s other major economies.

The Euro again lost ground against the US Dollar, but gained slightly against the Pound. The EUR/USD exchange rate fell from 1.4301 down to 1.4276 across the day, the single-currency coming under fierce pressure amid a fairly poor economic docket; with 2nd quarter German GDP showing no change in the previous reading, the n.s.a growth rate level at 2.8%, and the w.d.a figure at 2.7%. German PMI manufacturing for August fell, from 52.0 to 50.9, with the Euro-zone PMI manufacturing index also falling, from 49.7 to 49.0.

Today will see the release of German PPI figures; with the market forecast for prices to rise both annually and monthly; which may not be a positive result for Europe, as rising producer prices are a good early indicator of rising inflation, which the ECB is determined to keep suppressed. With the current fragile overall economic state of the Euro-zone, rising inflation would be a serious issue, with the ECB having little room to be able to raise interest rates further after having done so twice this year already.

The US Dollar continued to show good gains in the currency exchange market, against both the Euro and the Pound; despite slightly disappointing economic data, with ISM manufacturing and prices paid for August both falling, from 50.9 to 50.6 and from 59.0 to 55.5 respectively. The currency has been finding strength on two fronts; as a safe-haven currency for investors with deep-rooted worries over the current burgeoning debt problems across Europe, and the fact that it seems almost certain that the Federal Reserve will be undertaking further monetary stimulus to boost the nation’s fragile economy.

This afternoon could see the US Dollar make sharp movements in the market, with the highly volatile Non-farm payrolls report for August. The market forecast; albeit often way off the mark, is for a drop in the reading, from 117,000 to around 65,000; which would be negative for the Dollar; but as is often the case, a revision of the previous month’s figure, and a large surprise in the current month’s level could see the currency fluctuate rapidly upon the data’s release.

The Market Team at KBRFX - www.twitter.com/kbrfx

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Foreign Exchange Daily Market Update 31/08/11

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The Pound lost ground against both the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate fell from the mornings open at 1.1310 down to 1.1281 by the days close. The GBP/USD exchange rate showed a much deeper decline though, falling from 1.6380 to 1.6276 by the end of the day. The sole piece of economic data released from the UK yesterday however, was positive; with mortgage approvals for July showing a marked improvement, up from 48,500 approvals to 49,200; which is positive for the housing market.

There are no scheduled economic events for the UK today; so the currency will be open to shifts in risk sentiment and market data from the world’s other major economies.

The Euro made a small advance against the Pound but fell slightly against the US Dollar yesterday. The currency didn’t really receive any boosts from the economic data that was released yesterday, with Euro-zone consumer confidence figures for August showing a minimal improvement, from -16.6 up to -16.5, the index reading still at levels that are the lowest since 2008. Euro-zone business climate indicator figures were also poor, with the reading falling from 0.44 to 0.07, showing an increasingly negative outlook from industry leaders towards current conditions and the state of the overall economy.

This morning has already seen the release of numerous figures form Europe; with German retail sales showing a slight increase annually, from -2.1% to -1.6%, but falling month-on-month, from 4.5% down to 0.0%. Germany’s labour market has come under close scrutiny with the unemployment rate holding firm at 7.0% for August, and the unemployment change showing the labour market lost less jobs, -8,000 as opposed to the previous month’s revised level of -10,000. Later today we will see the release of Euro-zone CPI (inflation) estimates, and also the latest Euro-zone unemployment rate. The currency could come under pressure if there is any disappointment in either figure.

The US Dollar made good gains against both the Euro and the Pound yesterday, despite a huge fall in US Consumer Confidence for August. The EUR/USD exchange rate pulled back from 1.4481 at the morning’s open, to 1.4426 by the day’s close, in spite of the consumer confidence figure plummeting from 59.2 down to 44.5, with the currency exchange market pricing in a level of around 52.0. The drop though, does add fuel to speculation that the Federal Reserve may look to start pressing on with further economic stimulus to prevent the nation falling into a double-dip recession. The release of the minutes from the Federal Reserve’s last policy meeting last night backed this up; with three out of 10 voting officials disagreeing with chairman Ben Bernanke's decision to announce he plans to keep rates close to zero for another two years. Details of the minutes showed that some officials favoured far bolder action than that taken, arguing for a third round of asset purchases (quantitative easing). The minutes stated that "A few members felt that recent economic developments justified a more substantial move, with participants noting deterioration in labour market conditions, slower household spending, a drop in consumer and business confidence and continued weakness in the housing sector."

Today will see the ‘deteriorating’ US labour market come under close scrutiny, with the release of ADP employment change figures for August; with the market forecast for a slight decrease in the number of jobs added, from 114,000 down to 103,000. Traditionally, any signs of weakness should see a currency fall in value, but as with yesterday’s market movements it may well be that the negative data is only serving to increase the likelihood of monetary stimulus from the Federal Reserve, which in the long term should benefit overall economic growth. Factory Orders figures for July will also cross the wires this afternoon, with the market forecast for a positive increase in the index reading.

The Market Team @ KBRFX - info@kbrfx.com

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Foreign Exchange Daily Market Update 30/08/11

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The Pound held very narrow trading ranges against both the Euro and the US Dollar in the foreign exchange market yesterday; as would be expected with a bank-holiday in the UK. With no data at all released from the UK, the GBP/EUR exchange rate ended the day at 1.1298, and the GBP/USD exchange rate was at 1.6395. The overwhelming movement for the Pound across last week was down, against both the Euro and the US Dollar, with a combination of poor economic data, and lukewarm growth figures seeing no increased positivity towards the currency.

This morning has seen the release of some positive data from the UK, with mortgage approvals for July showing a marked improvement from 48,500 to 49,200. The rest of the week ahead holds only a small amount of influential UK economic data, with consumer confidence, house prices, and PMI manufacturing figures the only highlights in a week that will be dominated by high-level data from Europe and the US.

The Euro hardly moved against the other major currencies in the currency exchange market yesterday, despite the release of CPI (inflation) data, which showed that price-growth in Germany is slowing, the annual inflation rate falling from 2.4% to 2.3%, and monthly from 0.4% to -0.1%. The EUR/USD exchange rate was hardly affected, as the mornings open at 1.4529 was practically unchanged throughout the day; the exchange rate trading at 1.4511 by the market close.

This morning has seen the release of Euro-zone consumer confidence for August, with the reading of -16.5; a touch up from the previous months’ level of -16.6, but still near the lowest levels since 2008; not being a positive result for Europe, and in turn it’s currency. The rest of the week is data-heavy from Europe, particularly it’s strongest economy, with the German labour market set to come under scrutiny tomorrow, and the focus to shift to GDP and PMI later in the week, with Euro-zone PPI figures poised to move the market should there be any surprises on Friday.

The US Dollar recovered well against the Pound, but overall lost ground against the Euro despite making some good gains at various points during the week. Figures released yesterday from the US showed that both personal income and personal spending increased for the month of July, from 0.2% to 0.3%, and -0.1% to 0.8% respectively; which is a good indication towards overall economic growth, and increased consumer confidence.

This will be tested today with the release of US consumer confidence figures for August, and the market will also be looking closely at the minutes from the Federal Reserve’s last policy meeting which will be released this evening. It is widely accepted that the Federal Reserve will not be affecting the base rate until well into next year at the earliest, but there could be some indication into the central bank’s view on further quantitative easing, with the possibility of further stimulus to try an improve growth levels as the US economy is still in a fairly fragile state.

The Market Team @ KBRFX

Foreign Exchange Daily Market Update 26/08/11

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The Pound ended yesterday almost unchanged against the Euro, but lower against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate which opened at 1.1326 had a small pick-up mid afternoon, but ended the day at 1.1327. The GBP/USD exchange rate fell from the mornings open at 1.6372 to 1.6284 by the days close. The economic data released from the UK yesterday was negative, with CBI reported sales figures for August showing a marked decline, from -5 to -14. The main reason that the market attributed the Pound’s weakness against the Dollar however was the expectation that the Federal reserve Chairman Ben Bernanke will be announcing further monetary stimulus in the US today, which will help to improve the economic outlook for the US.

This morning has seen the final reading of 2nd quarter GDP from the UK. The result was unchanged from the previous reading with the annual growth rate showing 0.7% and the quarterly growth rate showing 0.2%. The currency market showed little reaction to the release, which was widely expected to be unchanged.

The Euro lost ground against the US Dollar following the increased positive sentiment towards the US, but the single-currency held firm against the Pound. The EUR/USD rate fell throughout the day, from 1.4454 down to 1.4374. There were no significant data releases from the Euro-zone yesterday to further affect movements on the currency exchange market.

Today’s European economic docket is devoid of any data releases, leaving the currency open to risk sentiment, and news from the world’s other major economies.

The US Dollar made good gains across the board yesterday, with increased positivity towards the nation anticipating the addition of further monetary stimulus - QE3 to the economy at Fed Chairman Bernanke’s speech at Jackson Hole this afternoon. Figures yesterday showed that the US labour market still remains a little unsteady though, with continuing claims falling for the month; from 3,721,000 to 3,641,000, but initial jobless claims increasing from 412,000 to 417,000.

This afternoon contains a lot of significant economic events for the US, with the potential to make big moves on the currency markets. Before Bernanke’s speech, we will see the final reading of 2nd quarter GDP from the US, as well as the University of Michigan confidence survey results for August. Despite the Dollar showing a marked appreciation through most of this week, any disappointments in terms of economic growth of confidence could be damaging to the currency.

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Foreign Exchange Daily Market Update 25/08/11

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The Pound started to fall against both the Euro and the US Dollar in the foreign exchange market throughout yesterday. The GBP/EUR exchange rate fell from the mornings open at 1.1439 down to 1.1369 by the end of the day; with the GBP/USD exchange rate also slipping from 1.6476 down to 1.6368 by the days close. The Pound is coming under pressure with the market speculating that the Bank of England may expand its asset purchase program in the near-term, in the face of a slowing recovery; to prevent the nation falling back into recession.

Overnight we have seen the release of Nationwide consumer confidence figures; with the level falling slightly from 51 to 49, but coming in above expectations for a deeper slide to 45. This morning will see the release of CBI reported sales figures for August, with the market forecast for a drop in sales, the index expected to fall from -5 to -10, which could put the Pound under further pressure.

The Euro started to reverse some of its earlier losses against the Pound yesterday, and finished the trading day almost unchanged against the US Dollar. Despite a disappointing economic docket, the EUR/USD exchange rate ended the day at 1.4395, almost exactly as the market open at 1.4393. A negative outlook for Germany was reinforced yesterday, with IFO surveys showing a drop in business climate, current assessment, and expectation readings for the month of August. Euro-zone industrial new orders also fell; annually from 13.8% down to 11.1% and month-on-month from 3.6% to -0.7%.

This morning has seen the release of German GfK consumer confidence figures, with unsurprisingly a small drop in the reading, from 5.3 to 5.2, but the currency has remained largely unaffected. Aside from French labour market figures later this afternoon; which should have little to no effect on the currency markets; there are no significant pieces of economic data scheduled for release from Europe today.

The US Dollar regained some ground against the Pound yesterday, but showed little overall gain against the Euro despite making a small surge during the mid-afternoon. There was positive news from the US yesterday, with durable goods orders surprisingly rising for the month of July; from -1.9% up to 4.0%, and the house price index showing a positive gain, from 0.4% to 0.9%.

Today will see the release of initial jobless claims, and also continuing claims figures from the US. Despite both figures being classed as fairly low-level, any rapid shifts to either the up or downside, would have the potential to have a knock-on effect to the currency exchange markets.

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Foreign Exchange Daily Market Update 24/08/11

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The Pound made a small gain against the Euro, but lost ground against the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate picked up from 1.1436 at the mornings open to trade at 1.1445 by the market close, while the GBP/USD rate fell from 1.6543 to 1.6506 throughout the day. The sole piece of economic data released from the UK yesterday was positive, with the BBA loans for house purchase figure showing a marked increase for July; up from 32,123 to 33,417, way above the market forecast for levels closer to 31,750.

There is no scheduled data for release from the UK today, so the currency will be open to any shifts in sentiment, and data from the world’s other major economies.

The Euro lost ground against both the Pound and the US Dollar yesterday; the EUR/USD rate falling from 1.4465 in the morning to 1.4421 by the end of the day. There was quite a lot of data released from Europe yesterday; with French, German, and Euro-zone PMI showing a mainly negative picture overall, for the manufacturing and services sectors. The ZEW economic sentiment surveys for Germany and the Euro-zone also showed disappointing drops, from -15.1 to -37.6 and from -7.0 to -40.0 respectively. Euro-zone consumer confidence also fell for the month of August, from -11.2 to -16.6, which put the currency under a lot of pressure.

This morning we have already a seen a further dent to sentiment in Europe, with the release of German IFO figures for business climate, current assessment, and expectations; with all three figures showing a marked drop; the reading for expectations (for the German economy in the coming months) falling to it’s lowest level for nearly a year.

The US Dollar regained some ground against the Pound and the Euro in the currency exchange market yesterday. Data released from the US wasn’t positive, with new home sales figures for July showing a sharp decline, from 312,000 sales to 298,000 sales.

Today will see the release of durable goods orders for July, and monthly and quarterly house price index readings. The market is forecasting a large increase in durable goods orders, which could well benefit the dollar, and should the housing market figures display any increased positivity; this too could hep boost the dollar.

The Pound has also been maintaining good levels against the Aussie Dollar, with the GBP/AUD rate picking up overnight from 1.5652 to 1.5743; which is a welcome boost for expats looking to move funds from the UK across to Australia, who have been suffering with low rates for many months.

The Market Team @ KBRFX

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Foreign Exchange Daily Market Update 22/08/11

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The Pound finished last week decidedly higher against both the Euro and the US Dollar in the foreign exchange market. The GBP/EUR exchange rate which opened on Monday at 1.1385 fell to a low of 1.1324 on Monday afternoon, before soaring to a high of 1.1554 on Friday morning, before settling at 1.1484 by the close on Friday. The GBP/USD exchange rate followed a similar pattern, opening at 1.6292, which was near the low of the week at 1.6280 on Monday morning, before reversing throughout the week to break 1.6613 on Friday afternoon, closing at 1.6552.

The economic data released from the UK was quite mixed; with Tuesday seeing CPI (inflation) figures showing a small rise, both annually, from 4.2% to 4.4%, and month-on-month from -.01% to 0.0%. Wednesday was not so positive though, with jobless claims increasing from 31,300 to 37,100 for the month, the claimant count rate rising from 4.8% to 4.9%, and the overall unemployment rate in the UK increasing from 7.7% to 7.9%. Wednesday morning also saw the release of the minutes from the Bank of England’s last policy meeting which showed a complete majority vote of 9-0 in favour of keeping the base interest rate on hold, with the MPC stating that ‘’the slowing in world demand growth’’ contributed to their decision, and that despite the central bank expecting inflation to peak near 5.0% this year, weak economic growth will cause inflation to fall quicker than earlier anticipated. There was an indication though that the bank may be paying serious consideration to further quantitative easing should it be required. The UK’s economic docket rounded off on Thursday with disappointing retail sales figures; the annual rate slowing from 0.2% to -0.2%, and monthly from 1.0% to 0.2%.

This coming week is not overly data heavy in terms of UK economic data. Tuesday will see the release of BBA loans for house purchase figures for July, with the market forecast for a slight increase in the number of loans approved. Thursday will also turn the spotlight onto the housing market; with the release of Nationwide house prices; which showed a negative contraction last month. Friday is the biggest risk event of the week for the UK, with the release of 2nd quarter GDP figures. The currency exchange market will be primed to react to any deviation in the expected levels of 0.2% growth quarterly, and 0.7% annually, with any downside disappointment having the potential to weaken the Pound.

The Euro did gain some ground against the US Dollar last week, despite making heavy losses versus the Pound. The EUR/USD rate which opened on Monday at 1.4309, picked up to a high of 1.4517 on Wednesday before falling down to the week’s low of 1.4258 on Friday morning, recovering to trade at 1.4410 by the market close on Friday.

The overall tone from the European economic docket last week was negative; with Tuesday’s German and Euro-zone combined 2nd quarter GDP figures showing a sharp drop in growth. The German annual n.s.a. rate fell from 5.0% to 2.8%, the annual w.d.a. rate from 4.7% to 2.7%, and quarterly from 1.3% to 0.1%. The Euro-zone combined result was also lower, with the annual rate falling from 2.5% to 1.7%, and quarterly from 0.8% to 0.2%. Wednesday saw Euro-zone CPI (inflation) figures cross the wires; and the result was a fall in inflationary pressure. The annual level held at 2.5%, while the monthly level fell from 0.0% to -0.6%, which takes pressure off the ECB to look at raising rates anytime soon. The European docket rounded off on Friday with German producer prices showing an increase, both annually and monthly, from 5.6% to 5.8%, and 0.1% to 0.7% respectively.

The week ahead for Europe does contain a fair amount of economic data. Tuesday will see the release of German and Euro-zone ZEW economic sentiment survey results, with the market forecast for an increase in negative sentiment based on the current debt woes and weak market conditions across Europe. Wednesday will focus on PMI figures, again from Germany and the Euro-zone combined. The expectation is for manufacturing, services, and the composite figure to all show declines for the month of August; which would not be beneficial for the currency. Wednesday will also see the release of German IFO business climate, current assessment, and expectations surveys, which will give some insight into business sentiment for the nation. The week will conclude on Friday with German producer prices figures, which are expected to show an increase, both annually and monthly.

The US Dollar continued to suffer last week in the foreign exchange market, as the increased media speculation that one of the world’s biggest economies could be heading back into recession put huge pressure on the currency and US markets.

The economic docket from the US last week was pretty mixed. Monday saw a sharp drop in Net long-term TIC flows (the amount of funds flowing into the US for stocks/bonds/securities), from 24.2 billion dollars, down to 3.7 billion; which isn’t really a surprise following the nations credit rating cut. Tuesday saw a downturn in building permits and housing starts, but an increase in industrial production. Wednesday saw price pressures increase, with PPI figures showing an increase annually from 7.0% to 7.2%, and from 2.4% to 2.5%. Thursday’s market focus was on inflation, with CPI figures showing a slight increase in price growth annually (excluding food & energy) from 2.4% to 2.5%, but the overall level holding steady at 3.6%. There was some disappointment on Thursday, with existing home sales showing a drop, from 4.84 million sales, down to 4.67 million, which highlighted the weakness in the US housing market.

This week’s US economic docket will kick-off on Tuesday with new home sales figures; the market forecast for an increase from 312,000 to 315,000. Wednesday will see the release of durable goods orders, which are also expected to see an increase, so the US dollar could well benefit from increased fundamental positivity. Friday will be a major day fro the US, with the release of 2nd quarter GDP figures, as well as Federal Reserve Chairman Ben Bernanke speaking at Jackson Hole; where many analysts are predicting that he will announce a further round of monetary stimulus/quantitative easing to try and boost the economy (QE3), as the US is currently facing a glum outlook.

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Foreign Exchange Daily Market Update 18/08/11

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The Pound made good gains against the Euro, and soared against the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate moved up from the morning’s open at 1.1420 to 1.1486 by the end of the day, with the GBP/USD exchange rate rising from 1.6434 up to 1.6577 by the close of the UK business day. The morning’s economic data from the UK however was not entirely positive; with the unemployment rate rising from 7.7% to 7.9%, the claimant count rate also increasing, from 4.8% to 4.9%, and jobless claims rising from 31,300 to 37,100 for the month of July. The minutes released from the Bank of England’s last policy meeting showed a complete majority vote of 9-0 in favour of keeping the base interest rate on hold, with the MPC stating that ‘’the slowing in world demand growth’’ contributed to their decision, and that despite the central bank expecting inflation to peak near 5.0% this year, weak economic growth will cause inflation to fall quicker than earlier anticipated. There was an indication though that the bank may be paying serious consideration to further quantitative easing should it be required.

This morning has seen the release of UK retail sales figures for July, with the index showing a drop from 0.2% down to -0.2% annually, and month-on-month from 1.0% down to 0.2%. The Pound did weaken slightly on the figure’s release.

The Euro lost ground against the Pound, but made some small gains against the US Dollar yesterday; the EUR/USD exchange rate picking up from 1.4390 in the morning, to 1.4431 by the day’s close. The economic docket from Europe yesterday showed that CPI (inflation) in the Euro-zone held steady, the overall annual rate stalling at 2.5%, with the core index reading falling slightly, from 1.6% to 1.2%. Despite the drop against the Pound, the gain against the US Dollar may be attributed to the increased market sentiment and media coverage in regards to the possibility of the US sliding back into recession.

There are no economic events of real note scheduled for Europe today, so the currency will be open to shifts in market sentiment, and news from the world’s other major economies.

The US Dollar fell heavily against the Pound, and also slid against the Euro yesterday. The currency is facing fierce pressure in the market, as many leading market experts are tipping the nation to fall back into recession. Despite an additional $600 billion being pumped into the US economy in the last 9 months, overall growth has been well down on the previous year, and with the labour market showing increased weakness; house prices falling, and mortgage applications down there are fears that the US may suffer a ‘double-dip’. Economic data released from the US yesterday showed that the producer price index rose annually, from 7.0% to 7.2%, and excluding food and energy; rose from 2.4% to 2.5%.

Today will see the release of quite a bit of data from the US. Existing home sales figures are set to cross the wires this afternoon, along with the latest Philadelphia Fed index reading. The main focus though is likely to be on the release of CPI inflation figures, with the market forecast for a slight drop in the overall level of price-growth, from 3.6% to 3.3%, but excluding food and energy a small rise is expected; from 1.6% to 1.7%. Increased inflation would but pressure on the Federal Reserve, who have already stated they will be keeping the base interest rate at the current level well into 2012, possibly 2013.

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Foreign Exchange Daily Market Update 17/08/11

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The Pound made good gains against both the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate picked up from the mornings open at 1.1349 to trade at 1.1392 by the end of the day. The GBP/USD also rose throughout the day, from 1.6339 to 1.1422 by the day’s close. The UK’s economic docket yesterday showed that annually, consumer prices (inflation) rose from 4.2% to 4.4%, and monthly from -0.1% to 0.0% flat. The Bank of England have previously indicated that they expect inflation to peak at around 5.0% in the medium-term, before falling back naturally, so this was not to much of a shock to the market.

This morning will see the release of the minutes from the Bank of England’s last policy meeting, with the currency exchange market likely to take direction from any change in either the voting numbers, or rhetoric. The UK’s labour market will also come under scrutiny; with the release of jobless claims figures, claimant count rate, and the overall unemployment rate. The Pound could potentially make sharp moves if there are any surprises in the numbers.

The Euro weakened against the Pound, but made a small gain against the US Dollar yesterday. The EUR/USD rate picked up from 1.4396 to 1.4414 throughout the day. The drop against the Pound can be attributed to very disappointing GDP figures, from Germany and the Euro-zone as a whole. German growth fell annually from 4.7% to 2.7%, and quarterly from 1.3% to 0.1%, well below the market forecast. Euro-zone combined GDP also dropped sharply, from 2.5% to 1.7% annually, and quarterly from 0.8% down to 0.2%.

Today will see the release of Euro-zone CPI (inflation) figures; with the market expecting no change in price growth; which will be welcomed by the ECB, as a slowing in the growth rate will justify their two rate-hikes that have been implemented so far this year.

The US Dollar lost ground against the Euro and the Pound yesterday, with the economic data released showing a mainly negative picture. Housing starts fell for the month, down from 613,000 down to 604,000, with building permits also showing a decline, from 617,000 to 597,000. There was a slight positive, with industrial production showing a small increase, from 0.4% to 0.9% for the month of July.

The US economic docket today will focus on producer prices for July, with the headline annual index reading expected to hold at 7.0%, with the index excluding food and energy forecast to fall slightly from 2.4% to 2.3%. The US currency could benefit from any negative reaction to the UK’s Bank of England minutes, or the European inflation figures; with it’s status as a safe-haven currency still providing some comfort despite the nation’s reduced credit rating.

The Market Team @ KBRFX

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