Daily Foreign Exchange Market Update

Last week we saw the Pound lose ground against the Euro with the GBPEUR rate opening at 1.2459 and closing out at a weekly low of 1.2371; it did hit a weekly high of 1.2467 at the open of trade on Wednesday. The Pound did however see gains against the US Dollar during last week’s market session with the GBPUSD rate opening at a weekly low of 1.5902 and closing at a weekly high of 1.6031. Last week we saw UK public sector net borrowing be released with the figure coming out lower than expected at £6.5B showing a surplus which is good news for the economy. The MPC minutes from their last meeting were released too with the data showing all members voting to keep the base rate at 0.5%. This week will see the revised GDP figure be release which is set to remain at 1.0% and Thursday will see Mervyn King hold a press conference about the financial stability report.

The Euro gained against the Pound and the US Dollar in the foreign exchange market last week with the EURUSD rate opening at a weekly low of 1.2763 and closing at a weekly high of 1.2958. The main news from the Euro-zone last week was that of Moody’s cutting France’s credit rating from AAA to AA1 and the other credit rating agency, Fitch, giving it a negative outlook for the next year. French, German and Euro-zone PMI results all came out better than expected and the German 3Q GDP figure came out at 0.2%, as expected. Monday will see the Euro-group meeting be held in Brussels to discuss a range of financial issues such as the Euro support mechanism. On Thursday Italy will hold a bond auction on their 10-year bonds.

The US Dollar lost ground against both the Pound and the Euro in the foreign exchange market last week. It was a relatively quiet week for data release due to Thanksgiving but unemployment claims came out better than expected, 410K compared to the 415K predicted. This week the main data release will be durable goods orders which are set to fall by 0.6%. This shows a lower amount of consumer confidence as durable goods are those that last for at least three years so the initial investment must be worth it. Thursday will see the preliminary quarter-on-quarter GDP figure be released which is set to rise from 2.0% to 2.8%.

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

Daily Foreign Exchange Market Update

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

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

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

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

Foreign Exchange Daily Market Update 19/05/11

The Pound suffered yesterday as the economic docket reinforced a negative outlook for the nation. The GBP/USD exchange rate slipped from the day's high of 1.6288 to 1.6105 when it came to light that the number of Britons claiming jobless benefits rose in April by 12,400. This is the fastest pace of jobless growth the country has seen since January of 2010, and came in despite estimates calling for no change to occur in the claimant count rate. Further to this the Bank of England published it's minutes to May's policy meeting, revealing that most members of the MPC see raising interest rates as a risk to economy's recovery. The minutes showed that the vote was split 6-3 in favour of keeping interest rates on hold this month. As usual Andrew Sentance voted for a 50 basis-point increase, while Spencer Dale and Martin Weale continued to vote for a 25 basis-point rise. Many trader's had hoped that; given the central bank's forecasts on inflation reaching 5% this year and recent data pointing towards these forecasts being true, that more policy makers would have shifted to a more hawkish stance, which would have lead to an appreciation in the Pound as rate hike expectations increase.

April's retail sales figures headline the UK's docket. Expectations had called for sales inclusive of fuel receipts to grow by 0.8% up from March's 0.2% increase, while excluding fuel sales, retail figures advanced by the same margin. However when the figure beat these expectations to see sales excluding fuel reciepts rise by 1.2% month-on-month and inclusive of fuel sales there was 1.1% increase, and further to this March's figures were revised up to 0.4% and 0.3% respectively. The market has reacted well to the news with the Pound putting in gains against the Dollar and the Euro.

A mixed outlook from ECB board members made it difficult for traders to speculate on where the Euro currency exchange rate is heading. Greece came back into the lime light when ECB board member Vitor Constancio said that restructuring Greece's debt could be in store to avoid a default, but argued that it ought to be "the last resort" as it entails "enormous consequences." However Governing Council member Ewald Nowotny said restructuring of Greece's debt is "definitely not an element of discussion" at the ECB. He then spoke of interest rates saying that rates will rise to match growth and inflation, despite the fact that further hikes could raise the risk of debt contagion. But for the most part it seems sovereign debt fears weighed on the Euro through the first half of yesterday as the EUR/USD dropped to a low of 1.4197 from 1.4286.

The European docket is looking exceptionally light today with the only event of interest being ECB President Jean-Claude Trichet and ECB Executive Board Member Gertrude Tumpel-Gugerell's commentary on the state of the European economy. Typically Trichet's comments hold a lot of sway within the foreign exchange market so expect the Euro exchange rate to move in either direction depending on the outlook Trichet provides.

The highlight of yesterday's North American trading session was the release of the FOMC's latest minutes. For the most part the minutes echoed Chairman Ben Bernanke's comments at the post-decision press conference in April, where he cited concerns among Fed policy makers over the "upside risk to the inflation outlook," and the downside risk to growth. However a few policy makers at the meeting said the increase in inflation risks meant that the Fed should stand ready to tighten financial conditions sooner than had been expected.

The week's second round of US housing figures make an appearance on today's docket. Existing home sales are expected to have risen by 2.0% in April, a slow down from March's 3.7% rise in sales. The data has the potential to weaken the Dollar's standing against the other majors as the housing market looks to remain week. With New homes sales having grossly missed expectations earlier in the week it is possible that today's figures could do the same.