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 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 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

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

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

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

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

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

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

Daily Foreign Exchange Market Update

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.

Daily Foreign Exchange Market Update 09/10/12

Yesterday saw the Pound weaken against the Euro and the Dollar in the foreign exchange market. The GBPEUR opened at 1.2389, a day high but fell throughout the day to close at a low of 1.2354. The GBPUSD rate followed a similar pattern with it opening at 1.6093 and slipping down to 1.6031 by the close of trade. Yesterday saw no information coming out of the UK.

Today will be a busy day however for UK data release, with some information having already been released such as the RICS house price balance for September which rose from the previous result of -18% to -15% showing surveyors are still reporting a loss but at an increasing rate. BRC sale, like-for-like, have also been released this morning with the result increasing by 1.5% even though the expected result was set to decrease by 0.2%. Industrial and manufacturing productions have been released and both came out with worse results than previous months, -1.1% and -0.7% respectively. NIESR GDP estimates are set to be released later with it set to increase by 0.2%, with positive results generally bullish for the Pound.

The Euro gained strength against the Pound but lost some against the Dollar during yesterday’s market session. The EURUSD opened at a high of 1.2988 but slipped down to 1.2937 early afternoon before closing slightly higher at 1.2988. Yesterday saw German trade balance falling from 19.6B to 16.3B, a major figure in the Euro-zone as Germany is Europe’s largest economy and renown for exporting so lower results can put pressure on the Euro. The other major information that has already come out of the Euro-zone yesterday was the Sentix investor confidence, improving slightly from -23.3 to -22.2 showing a greater amount of confidence in the Euro-zone.

One of the main reasons for the Euro weakening is because Mario Draghi will speak in front of the Committee of Economic and Monetary Affairs of the European Parliament where it is predicted he will say that difficult times are still ahead and that Euro area leaders should carry on implementing the necessary fiscal reforms in order to protect the economy and that we should not lose confidence in the Euro. German Chancellor, Angela Merkel is set to meet with the Greek government in Athens today to discuss the necessary austerity cuts and other ways to save the Greek economy.

The Dollar gained strength against both the Pound and the Euro yesterday despite no data being released from the US. Today will also see no data being released.

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

Foreign Exchange Daily Market Update 29/07/11

View this on our website?

The Pound extended its gains against the Euro in the foreign exchange market yesterday, while remaining relatively unchanged versus the US Dollar. The GBP/EUR rate picked up from the day's open of 1.1370 and peaked at 1.1442 before closing out at 1.1420. The GBP/USD rate opened at 1.6330 and closed the day unchanged, but not before the currency pair hit a morning high of 1.6363 and then shifting to a low of 1.6290. On the docket the Confederation of British Industries' Reported sales index fell in July unexpectedly to -5 when forecasts had called for the index to increase from June's score of -2 to 2. The data's release coincides with the Pound's drop against the Dollar; however no noticeable difference was witness against the Euro.

This morning, the economic docket is scheduled to see June's Mortgage Approvals released, with expectations calling to for a rise from May's total of 45,900 to 46,000. The outcome would prove positive for the Pound.

The Euro weakened against both the Pound and the US Dollar over the course of yesterday's trading session. The EUR/USD rate slipped from the morning's level of 1.4350, with the pair closing the day at 1.4310. On the docket Germany's unemployment change figure for July headlined the European data set, with the number of unemployed falling by 11,000 which missed estimates for a contraction of 15,000 unemployed. To further compound the outlook of the Euro-zone and the Euro itself, July's sentiment indicators on the economy, the region's industrial and services sectors and consumer confidence all came in below expectations, except for the consumer confidence index which improved marginally but remained entrenched in the negative with -11.2.

On the European economic calendar the currency exchange market has already seen retail sales in Germany fall by 1.0% in June compared to a year ago, however this was a softer contraction than the forecasted 1.6% drop in sales. Looking ahead the annualised Euro-zone Consumer Price Index is expected to hold steady at 2.7% from May into July. The outcome may have little impact on the Euro as the data isn't entirely supportive of a rate hike by the European Central Bank which would've made the currency more attractive to foreign investors. Regardless the Euro is likely to remain under selling pressure today as debt woes continue to weigh on the region.

The US Dollar managed to gain some ground against the Euro as the economic calendar provided an improved outlook for the nation, however no such meaningful move was seen against the Pound. The economic docket revealed that the number of first time claimants for jobless benefits was lower than expected in the week ending 22nd July, with claims falling from 422,000 to 398,000. A rise in pending home sales during the month of June of 17.3% compared to the same time last year also helped to improve the US economic outlook.

Looking ahead, today’s economic calendar is scheduled to see 2nd Quarter GPD figures for the US released with economists forecasting that the annualised growth rate will slow from 1.9% to 1.8%, while the quarter-on-quarter rate is expected to hold steady at 2.0%. This may prove to be positive for the US Dollar given that the US economy is still evidentially growing, and the University of Michigan’s consumer confidence reading for July may also benefit the Dollar if the index increases in line with its 64 forecast reading. However with the US Congress having not yet agreed to raise the debt ceiling, volatility on the US Dollar may ensue when the US market opens, over shadowing any positive indications from today’s economic data.

Sam Kennison
KBRFX

Website

Twitter

Foreign Exchange Daily Market Update 27/07/11

View this on our website?

The Pound picked up marginally against the Euro, and made significant gains against the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate went up slightly from the morning’s open of 1.1267 to trade at 1.1303 by the close. The GBP/USD exchange rate however; rocketed from 1.6337 to 1.6390 throughout the day, breaking the 1.6400 level in the morning. The main data event from the UK was the 2nd quarter GDP reading, which showed that the annual growth rate fell from 1.6% to 0.7%, and the quarterly rate fell from 0.5% to 0.2%. This was viewed as positive by the market though, with the quarterly rate meeting median forecasts; and not falling below market predictions, which could have been disastrous for the Pound.

Today’s economic docket from the UK will see the release of the CBI’s business optimism figure; which is expected to show a slight increase in the reading; which would be positive for the Pound.
The Euro slipped against the Pound and the US Dollar yesterday; the EUR/USD rate coming down from the morning’s level of 1.4499, to trade at 1.4486 by the market’s close. The only figure of note released from Europe yesterday was the German GfK consumer confidence figures for August, which showed a slight drop in the index, from 5.5 down to 5.4. The constant debt woes surrounding Europe, and the fact that bigger nations such as Germany and France continue to be the nations that contribute the most financially; is starting to take it’s strain on the confidence of the general public in those countries; and is not positive for the currency as low consumer confidence tends to result in lower consumer spending, and retail sales.

The European economic docket today will see the release of German CPI (inflation) figures, with the market expecting no change in the annual inflation rate of 2.4%, and with the ECB’s last 2 rate-hikes expected to maintain inflationary pressures across the Euro-zone, any drop in the level may be viewed positively by the market, as there is a theory that further monetary policy tightening from the ECB in regards to inflation could do more harm to the economy than good.

The US Dollar continued to lose ground in the currency exchange market; with time seemingly running out for Congress to reach a solution for raising the debt ceiling, to prevent a default. Despite this, yesterday’s figures showed that consumer confidence rose for the month of July, from 57.6 to 59.5; suggesting that the US public will continue to spend freely over the coming months as sentiment improves. There was some negative news though, with new home sales figures for July reporting a drop, from 315,000 sales to 312,000 amid market expectations for an increase. This reinforces the fact that the housing market is still weak in the US, and could be one of the factors that slows overall economic growth.

Today will see some high-level market data, with durable goods orders for June set to report. The figure is expected to show a drop; but the market will be wary of any surprises, and even if the figure drops, but comes in higher than expected, the currency could benefit. This afternoon will also see the release of the Federal Reserve’s beige book report; which will give an insight into current economic conditions, as surveyed throughout the Fed’s 12 districts, and draws information from economists, market experts, and key business contacts. Any increased positivity could well see the US Dollar stat to regain some ground.

Mike Hood
KBRFX

Website
Twitter

Foreign Exchange Daily Market Update 26/07/11

View this on our website?

The Pound moved slightly lower against the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR rate dropped from the morning’s open of 1.1346 to trade at 1.1340 by the market’s close. The GBP/USD exchange rate also fell, but only marginally, from 1.6292 down to 1.6281 by the end of the day. It was a fairly quiet day in terms of economic data across the world’s major economies, with the only figure of note out of the UK being BBA loans for house purchases, which showed an increase for the month of June; up from 30,580 to 31,747.
Today will see the market focus on 2nd quarter GDP figures form the UK. Analysts are almost certain in their predictions to see the growth rate fall, both annually, and quarterly, but the margin of this will be what influences any movement on the Pound. The figure, which is due out at 09:30 could see the Pound weaken if the growth rate falls drastically, as along with the base interest rate, economies growth in a country is one of the main draws to an influx of investor’s funds into its currency.

The Euro did move up a touch against the Pound, but fell slightly against the US Dollar yesterday. The EUR/USD rate fell marginally, from 1.4359 down to 1.4352 throughout the day, after staging a small rally during the early afternoon. There was no key economic data released from Europe yesterday to influence the currency exchange market further; but there was news of Greece having its credit rating cut once more; so despite a re-structuring package being agreed, ratings agencies see the nation as almost certain to default on its own bond repayments.

This morning has already seen the German GfK consumer confidence report show a drop in positive sentiment for the month of July, with the index falling from 5.5 to 5.4; going against market forecasts for a rise in the reading. This shows that despite Germany being one of the strongest member states in the EU, that the current debt contagion and default woes, combined with the immense amount of money being pumped into restructuring plans by the German government, the sentiment amongst the general public is worsening.

The US Dollar did make some small moves against the Euro and the Pound yesterday, but any gains were short lived as the currency started weakening back off this morning. The US economy is still facing the possibility of a default, and also a credit rating cut; which does have the potential to affect global financial markets. The currency which is often viewed as a ‘safe-haven’ in times of economic trouble, is now starting to raise concerns amongst investors, who are worried about the value of the Dollar and US treasuries should the nation have it’s rating slashed.

Today will see the release of new home sales figures for June, which are expected to show a small rise, which would be a positive boost for what is still quite a weak US housing market. The most notable data release though will be consumer confidence figures, which are set to report at 15:00, with the market forecast for a fall in the levels; which could prove to be negative for the US Dollar. Consumer confidence is usually linked to consumer spending, so a drop in the levels could tie-in to a possible slowdown in retail sales and consumer spending, which would not be positive for the overall economic picture in the US.

Mike Hood
KBRFX

Website
Twitter

Foreign Exchange Daily Market Update 25/07/11

View this on our website?

The Pound ended the week lower against the Euro, but higher against the US Dollar in the foreign exchange market. The GBP/EUR rate fell from 1.1461 on Monday, to trade at 1.1363 by Friday’s close. The GBP/USD exchange rate though, moved up throughout the week, from 1.6099 on Monday to trade up at 1.6309 by the end of the week. The Pound didn’t really receive any boosts from the economic data that was released during the week. The main data-event was Wednesday’s release of the Bank of England’s minutes from their last policy meeting; which showed no change in the voting for either the base interest rate or the asset purchase target to change, with the central bank being seen as having no alternative to change monetary policy for fear of damaging the economy. Thursday saw some negative news with Nationwide consumer confidence falling from the previous month’s reading of 55 down to 51, along with Public finance figures showing that the amount of money diverted by the government into the public sector increased from 11.3 billion pounds to 21.0 billion pounds. Some positive news however was that public sector net borrowing fell, from 14.6 billion pounds down to 12.0 billion pounds, and retail sales also increased, the annual rate rising from -0.2% up to 0.2%.

The week ahead will see the market focus on Tuesday’s release of 2nd quarter GDP figures, with the annual rate set to fall from 1.6% down to 0.8%, and the quarterly level from 0.5% to 0.2%; which would not be positive news for the UK economy, and will put pressure on both the UK government and the Bank of England to try and stimulate some growth in the economy to prevent a slip back into continuous negative growth. Wednesday and Thursday will be focused on figure releases from the Confederation of British Industry (CBI), with business optimism figures along with July’s reported sales figures set to cross the wires. The currency could well take direction from any upturn in the levels, which would be positive for the overall economic picture. Friday will see GfK consumer confidence figures released, along with mortgage approvals and net consumer credit figures; with the currency exchange market poised to see the possibility of the Pound appreciate, should the figures come in line with, or slightly above market expectations.

The Euro did regain some ground against the Pound, and also managed to surge against the US Dollar last week. The EUR/USD rate moved up across the week, from Monday’s open at 1.4045, to trade up at 1.4351 by Friday’s close. Barring the news that EU ministers agreed to a re-structuring of Greece’s debt on Thursday, all the economic data released form the Euro-zone throughout the week was negative. German producer prices fell annually from 6.1% down to 5.6%, Euro-zone consumer confidence also fell – from -10.3 to -11.4. On Thursday, figures showed a string on disappointments in regards to PMI levels, with German and Euro-zone PMI manufacturing, and services both falling for the month of July. This stream of negative data continued through Friday, with German IFO business climate levels, current assessment, and expectation figures all falling, way below market expectations. However; the resolution agreed for Greece’s debt re-structuring was positive enough to turn the market despite all the negative economic indicators, and the currency managed to find strength toward the end of the week.

This week will see little news from Europe until Wednesday; when the market will look to German CPI (inflation) figures, with the market expecting no change in the annual rate of 2.4%; but a small increase in the monthly level from 0.1% to 0.3% which would be beneficial for the Euro. Thursday will see the release of German unemployment change figures, and also the unemployment rate. With the labour market in Germany staying fairly robust, should there be any disappointments to the downside, expect to see the currency weaken. Friday will close off the week with German retail sales figures, and Euro-zone CPI (inflation) estimates for July; a boost in retails sales may not be enough on it’s own to trigger any upsurge in the currency, but a rise in CPI could be worrying for the economy, as the ECB have already risen rates twice this year to control inflation, but should the rise continue, it would press the ECB into further tightening which could cause problems for the economy.

The US Dollar continued to weaken across the board last week; with a solution still yet to be reached for raising the debt ceiling in the US to prevent the nation defaulting on debt repayments that are due at the start of August. Despite a lot of positive economic data from the US last week, with housing starts and building permits increasing for the month of June, along with the Philadelphia Fed Index soaring from a previously negative reading of -7.7 to a positive 3.2; the currency was rocked by the possibility of a default approaching, and should this happen – ratings agencies will be sure to cut the nation’s credit rating which would then hugely devalue US treasury bonds.

The week ahead will see some high-level data releases, mainly Tuesday’s US consumer confidence figures, along with Wednesday’s release of the Fed’s beige book report, and notably Fridays release of US 2nd quarter GDP figures. The currency will be almost certain to react to any positive upturns in any of these data releases, but the key issue still remains that Congress need to find a solution to raise the US’s debt ceiling in the next week or so; otherwise there could be dire consequences. Should the value of US treasuries drop, and also the US Dollar, the possibility is that large holders of US treasuries and currency; like China, may well look to sell the assets they hold and look for currency/paper with a lower level of risk.

Mike Hood
KBRFX

Website
Twitter

Foreign Exchange Daily Market Update 13/07/11

View this on our website?

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

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

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

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

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

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

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

Mike Hood
KBRFX

Website
Twitter

Foreign Exchange Daily Market Update 12/07/11

View this on our website?

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

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

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

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

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

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

Mike Hood
KBRFX

Website
Twitter

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 17/06/11

The Pound opened and closed almost unchanged against both the Euro and the US Dollar in the foreign exchange market yesterday. Despite a slight fall in the middle of the day, GBP/USD opened at 1.6142, and closed around 1.6128, with GBP/EUR opening just shy of 1.1420 and closing at levels of 1.1396. There was only one key set of figures on the UK’s economic docket yesterday, and that was Retail Sales result for May. The core result was a drop, both month-on-month and annually; falling from 1.1% to -1.6%, and from 2.3% to 0.00% respectively. This can be viewed as a negative sign for the UK, as it shows a drop in consumer demand, and consequently, a potential slowing in economic growth.

Turning to today’s UK economic docket, there are no figures set for release; which leaves the Pound open to movement in the currency exchange market based on news events and data from the world’s other major economies.

The Euro held firm against the Pound and The US Dollar yesterday, albeit after a heavy drop against the Pound in the very early hours of Thursday morning. Market expectations for a rate-hike in Europe may have been dealt a slight blow yesterday, with the release of Euro-zone CPI figures. The figures showed that the risk of inflation has dampened slightly; the core index reading showing that price growth dropped from 1.6% to 1.5% month-on-month, and fell slightly from 2.8% down to 2.7% annually. While the figure still remains above the ECB’s target level, it may be an indication to the market that the heightened levels are temporary, and do not require a tightening of monetary policy.

While the delicate situation regarding a potential bail-out for Greece continues, the Greek Prime Minister George Papandreou appointed current Defence Minister Evangelos Venizelos as his new finance minister and deputy prime minister in a government reshuffle yesterday. Traders will be watching the situation closely, with Germany being one of the most likely member states to push for an immediate solution.

The economic docket for Europe today will focus on the Euro-zone trade balance results for April. Should the figures show a swing towards exports outweighing imports in the Euro-zone (a trade surplus) it would have the potential to provide some buoyancy to the Euro, as it would show an increased flow of funds into Europe. If the Euro was to start finding some strength, it would start making it more expensive for UK consumers that are buying Euros.

The US Dollar held steady yesterday, after making huge gains against the Pound on Wednesday, the GBP/USD rate staying at mid 1.61 levels throughout most of Thursday. The huge drop on Wednesday down from 1.6430 has suddenly made it more expensive for UK consumers buying Dollars. The US economic docket yesterday did show some encouraging signs for the economy – building permit figures showed an increase, up from 563,000 to 612,000. Housing starts were also up, from 541,000 to 560,000. The labour market received a welcome boost when figures showed that initial jobless claims fell month-on-month, down from 430,000 claims to 414,000 claims.

Today’s US economic docket will focus solely on the University of Michigan’s confidence survey for June. The figure is considered to be one of the foremost indicators of consumer sentiment in the US, and any drop is usually considered an early indicator of economic downturn. Analysts are predicting a slight drop, from 74.3 to 74.0, but this may not be a large enough swing to hurt the US currency too much.

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.