UK House Prices fall further in September—RCIS

• UK House Prices fall further in September—RCIS• UK Retail sales Growth slowed in Sept• Ireland Finance minister says focus is on additional spending cuts• Record rise in UK car insurance cost   

US Dollar:
With the US closed for business yesterday the USD traded within fairly tight ranges showing slight strength if anything against the majors ahead of the FOMC minutes. Any talk of quantitative easing will be very closely monitored and expect reasonable volatility once the release has been digested. The huge depreciation in the strength of the USD recently has been on the back of QE expectations could this be a case of sell the rumour buy the fact???
 
Data: FOMC Minutes 7:00    
        
    
 
Pound:

Sterling is believed to likely consolidate with risks skewed lower against the dollar. The pound is undermined by worse than expected Sept RICS UK house price data and the BRC report showing UK retail sales growth slow¬ing in Sept as well. The prospect of further QE this side of the pond is also a concern and at the moment every¬thing is pure speculation. If the CPI data this morning comes in higher this could trigger a sell off. Inflation is staying stubbornly high above the 2% target. With VAT increase looming in New Year this appears unlikely to change. The majority of commentators are suggesting that the high level of the CPI figure will lead to wage growth expectations and suddenly the genie is out of the bottle. If however the cause of the high inflation figures is due to direct taxation this reduction in stimulus and money being taken from the economy should hopefully mean the MPC believe they have greater room for manoeuvre with the figures.

Data: 9:30 CPI expected 3.1 (unchanged); Trade Balance expected –8 billion
    
 

Euro:
I would suggest to anyone with deliverable orders/invoices to fulfil this is not the time to start trying to second guess where any CCY pair is going. Work Orders via the platform certainly but also keep disciplined with either tight Stop orders or if you see a decent rate take it as the picture can change very quickly unless of course you have deep pockets. The EUR has proved a very difficult CCY to predict of late strengthening strongly. Overnight however it has drifted off against the majors as a return to safety of the dollar before the FOMC minutes this evening. This has seen the single currency give up some ground against sterling with over half a cent lost in the pounds favour.

Data: ECB President Trichet speaks at 5:30
   

General:

• Investors continue to watch for more possible Japanese intervention on the Yen after the Y2 trillion foray on Sept 15
• Goldman Sachs predicts Gold to surge in the coming year forecasting USD 1,400 a troy ounce. Consid¬ering it currently resides at USD 1,349 this does not seem that remarkable a jump any more!!

 

 

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