Foreign Exchange Daily Market Update 21/09/11

The Pound finished yesterday lower against the Euro, but slightly higher against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate which opened at 1.1486 in the morning closed at 1.1477, with the GBP/USD exchange rate closing at 1.5711, up from the mornings open at 1.5699. There was no significant economic data released from the UK yesterday, which may account for the fairly narrow trading range seen throughout the day.

This morning has seen the release of the minutes from the Bank of England’s last policy meeting; which showed that the vote was unanimous (9-0) to keep the base interest rate on hold, and the decision to keep the asset purchase target at its current level was by a majority of 8-1. Comment from the policy committee said the decision on whether to expand stimulus was “finely balanced.” Most policy makers said it was “increasingly probable that further asset purchases to loosen monetary conditions would become warranted at some point,” the minutes said. “For some members, a continuation of the conditions seen over the past month would probably be sufficient to justify an expansion of the asset purchase program at a subsequent meeting.”

The Euro finished the day having dropped slightly against the US Dollar, and showing a small gain against the Pound. There was some positive news from the Euro-zone with the release of German producer prices, with the resulting figures easing some pressure on the European Central Bank (ECB) in regards to price growth/inflation. Annually, producer prices fell from 5.8% to 5.5%, and month-on-month from 0.7% to -0.3%; which suggests that in line with the ECB’s predictions, inflation in the Euro-zone will fall in the medium-term. More negative news was to follow though, with the latest German and Euro-zone ZEW economic sentiment surveys showing that there was further increased negative sentiment, the German index falling from -37.6 to -43.3, and the Euro-zone index falling from -40.0 to -44.6.

There is no scheduled data from the Euro-zone today, so the currency will be open to movements based on risk sentiment and news from the world’s other major economies.

The US Dollar lost a small amount of ground against both the Pound and the Euro yesterday in the currency exchange market. The data released from the US was mixed, with Augusts’ building permits figure showing an increase, from 601,000 to 320,000, but housing starts for the same period fell; from 604,000 to 571,000.

Today will see an important figure in August’s existing home sales figure; and this evening’s Federal Reserve 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 Rate, Currency Conversion & Foreign Currency Transfer specialists.

Foreign Exchange Daily Market Update 20/09/11

The Pound held a fairly narrow trading range against the Euro, but fell against the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate opened at 1.1494 and stayed pretty steady throughout the day, closing at 1.1491. The GBP/USD exchange rate however fell from the mornings open at 1.5729, starting its descent at around midday; leaving the rate down at 1.5679 by the day’s close. There was no significant economic data released from the UK yesterday, with rate movements based on shifts in risk sentiment and news from other major economies.

The UK economic docket today has no data of note set for release.

The Euro held steady against the Pound, and fell a touch against the US Dollar yesterday in the currency exchange market. The EUR/USD exchange rate ticked down across the day, from 1.3684 at the morning’s open, down to 1.3643 by the day’s close. Like the UK, there were no significant data releases from the Euro-zone yesterday.

This morning has already seen the release of German producer prices, with the resulting figures easing some pressure on the European Central Bank (ECB) in regards to price growth/inflation. Annually, producer prices fell from 5.8% to 5.5%, and month-on-month from 0.7% to -0.3%; which suggests that in line with the ECB’s predictions, inflation in the Euro-zone will fall in the medium-term. Later this morning we will see the release of the latest ZEW economic sentiment survey results for German and the Euro-zone, with the market forecast for an increased negative outlook, which in regards to Germany would hardly be surprising; with an increased public feeling in the country that far too much in terms of public funds is being diverted into failing nations such as Greece.

The US Dollar fells lightly against the Euro, but gained against the Pound yesterday. With no data releases from the US throughout Monday, the gain can be attributed to the Dollar beneficial status as a ‘safe-haven’ currency, and with news circulating that there is a possibility Greece may not receive it’s next round of funding from the International Monetary Fund, it may be that investors decided to shift funds into the US currency.

Today will see the release of August’s building permits and housing starts figures from the US, but with the market forecast for a drop in both numbers, the Dollar could come under pressure with confirmation that the housing market, particularly at base/new build level is still very weak; which also has a negative knock on effect to the construction and labour markets.

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