Foreign Exchange Daily Market Update 19/09/11

The Pound finished last week lower against the Euro, but almost unchanged against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate fell throughout the week, from 1.1651 at Monday’s open, down to 1.1455 by Friday’s close. The GBP/USD exchange rate however, opened at 1.5802 and closed at 1.5801 following some choppy trading which saw it range between 1.5883 and 1.5724. The big economic events of the week saw CPI (inflation) in the UK rise annually from 4.4% to 4.5%, and month-on-month from 0.0% to 0.6%. Jobless claims fell for the month of August, from 33,700 to 20,300 which was a positive sing for the UK’s labour market. The claimant count rate however, remained at 4.9%, and the overall ILO unemployment rate for the 3 months to July stayed at 7.9%.

This week is not overly heavy with UK economic news, but the data releases scheduled are of high market importance. Wednesday will see the release of the minutes form the Bank of England’s last policy meeting, and with a hint that there might be a slight shift in the voting numbers in regards to further asset purchasing, the market will be watching very closely for the all important majorities. The Pound could well react to any surprises in the accompanying statement from Governor Mervyn King, with traders keen to hear what the central banks outlook is for the coming months in terms of growth and inflation. Wednesday will also see the release of the latest public sector net borrowing and public finance figures; which will give an insight into how well the UK government are progressing with proposed budget cuts to try and improve the nation’s balance sheet. There are fears though; that vast cuts could be damaging to economic growth. Aside from Wednesday, the only major release will be Friday’s BBA loans for house purchases; with the market forecast for a slight decline in the number.

The Euro managed to regain some ground across the week, finishing higher against the Pound and the US Dollar in the currency exchange market. The EUR/USD exchange rate moved up from the week’s open at 1.3561 to trade up at 1.3791 by the week’s close, having reached a high of 1.3908 on Thursday. Economic data from Europe across the week was mixed; with industrial production figures showing good gains fro august, the annual level of activity increasing from 2.6% to 4.2%, and month-on-month from -0.8% to +1.0%. There was some worry though, with the European Central Bank’s (ECB) latest monthly report indicating that the central banks stance towards policy has become increasingly dovish, and it foresees increased downside risk to growth and inflation. The over-night index swaps market has indicated an increased market feeling that the ECB may cut interest rates before the end of the year. Euro-zone CPI (inflation) figures released last week showed that price growth held firm annually at 2.5%, but monthly rose from -0.6% to +0.2%.

The week ahead for Europe will see the latest producer price index figures for Germany released on Tuesday, along with ZEW economic sentiment survey results from Germany and the Euro-zone, with the Euro set to face choppy trading if there is any fall in the results. There is an indication that consumer sentiment may be increasing in negativity for Germany, with a firm public opinion that the nation is putting itself at risk by offering so much in terms of monetary support to countries like Greece. Thursday will be data heavy, with the release of PMI numbers for manufacturing, services, and the composite result from France, German and the Euro-zone combined. The currency will take direction from any surprises in the numbers, with the market forecast for an overall negative result. Thursday will also see the release of Euro-zone consumer confidence figures; with the expectation for a worse result than the previous month.

The US Dollar reversed a previous week of gains when it finished lower against the Euro and almost unchanged against the Pound last week. The currency which had benefited from increased negative risk across Europe, did slip somewhat; amid a very mixed week in terms of economic data and sentiment. Figures released from the US showed that advance retail sales for August fell heavily from 0.5% to 0.0%, with producer prices also dropping from 7.2% to 6.5%. CPI (inflation) showed an annual increase in price-growth from 3.6% to 3.8%, but industrial production took a downturn; from 0.9% to 0.2%. There was a surprise on Friday, with the University of Michigan confidence index showing an increase in positive sentiment, from a reading of 55.7 the previous month, up to 57.8 for September.

The US economic docket this week is fairly light in terms of data, with Tuesday set to see building permits and housing starts figures cross the wires. Wednesday will see the release of existing home sales figures, and the biggest data event of the week: the Federal Reserve’s latest interest rate decision. It is almost certain that there will be no change to the base rate; but the market is primed for any hints of further monetary stimulus (quantitative easing) which has been mooted over the past few weeks. The currency will take direction from any shift in policy or rhetoric; but with economic growth still in a fragile state, along with the nation's labour and housing markets, the central bank will have to be very careful with an potential policy moves.

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

Foreign Exchange Daily Market Update 08/09/11

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The Pound continued with another day of losses against the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate fell from the mornings open at 1.1372 to 1.1343 by the end of the day, the Pound not helped by overall disappointing economic figures which showed that industrial production and manufacturing in the UK continued to fall annually; at an advanced pace. There was small glimmer of positive news with July’s figures for manufacturing production showing an increase in the monthly level, from -0.4% to +0.1%, but the annual level slid once again from 2.1% to 1.9%, enhancing the dire state of the UK’s industrial sector.

The main focus on the UK market will be today’s Bank of England meeting; even with the central bank expected not to make any change to either the key interest rate or the asset purchase target, last month’s meeting showed a shift in the voting towards providing further monetary stimulus, and the market will be looking for the next minutes release to see if there has been any advance on this.

The Euro again made some small gains against the Pound but fell against the US Dollar, the EUR/USD exchange rate coming down from 1.4083 at the mornings open to 1.4048 by the days close. There was some positive news though; with German industrial production figures showing a marked increase in both the monthly and annual levels; from 6.6% to 10.1 and from -1.0% to 4.0% respectively. After disappointing factory order figures the day before, it was a welcome boost for the Euro-zone, with some questions marks hanging over the current state of the strongest member state’s most important sector.

This morning has already seen the release of July’s German trade balance; which was a worse result than expected; the nations trade surplus contracting from 12.7 billion Euros to 10.4 billion; hardly surprising considering the release of last months export figures for the nation, which saw a sharp drop. There is a possibility that a strong currency is hindering Germany’s exporting capability; and it will be interesting to see if the ECB President; Jean-Claude Trichet faces any questions on the subject at today’s ECB rate meeting. Today’s ECB meeting is not expected to see any changes made to the base interest rate; or the central bank’s approach to bond-purchasing; but as always, one of the key factors will be the post-decision press conference; where the ECB President will give more insight into the central bank’s current thinking, and expectations for the coming months.

For the third day running, the US Dollar gained across the board in the currency exchange market, pushing back against the Euro and the Pound, the GBP/USD exchange rate falling from 1.6016 at the mornings open, down to 1.5941 by the end of the day. The release of the Federal Reserve’s Beige Book economic survey yesterday painted a fairly so-so picture of the overall economy. Local businesses reported little growth and some decline in sales, with manufacturers also giving a negative outlook. The service sector did see some improvements, but the housing market remained subdued; with the banking sector reporting little demand for loans, especially from consumers and commercial real estate companies. This could add more fuel to the argument that the Federal Reserve will need to undertake further monetary stimulus in the coming months (QE3), which would potentially see enhanced economic growth.

Today will see the release of July’s US trade balance figure; with the headline level expected to show a decrease in the nation’s trade deficit; from -53.1 billion dollars, to around -51.0 billion dollars. This would suggest either an increase in exports, or a drop in imports from the nation. With the Fed’s beige book survey yesterday revealing that auto retailers are struggling due to slower stock supply from Japan; this could be a contributing factor.

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 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.

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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.

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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