US Dollar:
A move back into the dollar yesterday saw the buck take back losses made earlier in the week with gains posted against both the euro and sterling. This came after the story regarding the Chinese revaluing their the yuan against the dollar died down after yesterday front page grabbing headlines. Risk sentiment has wa¬vered as investors slip back into the safe currencies such as the dollar and yen. The greenback took over a cent off sterling as GBP/USD moved from over $1.4938 to $1.4754 this morning. Against the euro we also saw a substantial move in the buck’s favour with over a cent to push EUR/USD close to the $1.23 level. Market par¬ticipants are also eager to see what the Federal Reserve has to say this week after an almost two month hiatus since its last policy meeting. The Fed kicks off its two-day meeting Tuesday, with results to come Wednesday, with no one expecting a move from the current 0% – 0.25% rate range. Data 15.00: Existing Home Sales ex¬pected 6.17M from 5.77M.
Pound:
Sterling has slid back slightly against both the euro and dollar, with cable taking the biggest hit. A fall of over a cent against the greenback was posted as risk appetite wavered slightly after the euphoria of the story regarding the Chinese moving to revalue the yuan yesterday. Today a sense of realisation has come back into the markets as the move yesterday may have been overdone. The more risk sensitive currencies, which sterling is one, all fell against the safe haven dollar. The other reason sterling is slightly down this morning is in the run up to today's UK emergency budget. All eyes will be on the Chancellor of the Exchequer as he delivers the budget at 12.30 today. Sterling is likely to consolidate against major rivals until then. Risk aversion remains a detriment to sterling, while the UK coalition government is tipped to take aggressive measures to tackle the budget deficit. George Osborne will claim today that the harshest budget for 30 years will squeeze the rich more than it hits the poor. The Chancellor will seek to sell his package of record spending cuts and tax rises as being stamped by fairness as he tries to win public support for a four-year austerity drive. This budget is a watershed moment, when households learn how much they will have to suffer to help pay off the country’s debts, and pay for the previous governments over-spending. Data 12.30: UK Emergency Budget.
Euro:
The euro is mostly lower against the majors this morning after coming under pressure on Monday following Fitch ratings downgrade of French banking against BNP Paribas to AA– from AA. The euro rose briefly against the US dollar after Beijing lowered the dollar/yuan reference rate Tuesday, but the gains evaporated as the yuan fell on apparent dollar/buying from Chinese banks. The euro’s move lower indicates that the concern over the European debt problems is still potent enough to inhibit broad based risk appetite from spilling into the euro. Looking ahead to today, we have the German Ifo business sentiment for June, which is forecast to drop back slightly as the wider eurozone sovereign debt crises is likely to have weighed on confidence. We have seen sideways trading for EUR/GBP over the last few days as the single currency remains under huge pressure, which looks set to continue for the short term. Data 09.00: German Ifo Business Climate expected 101.2 from 101.5. 15.00: Consumer Confidence expected –19 from –18.
General:
• The Chinese decision to allow more flexibility for the yuan saw commodity currencies such as the Rand, Aussie, Kiwi and Canadian dollars rally.
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| GBP/USD | 1.4762 |
| GBP/EUR | 1.1982 |
| EUR/USD | 1.2323 |
| GBP/JPY | 134.01 |
| GBP/AUD | 1.6809 |
| GBP/NZD | 2.0843 |
| GBP/ZAR | 11.1133 |
| GBP/CHF | 1.6369 |
| GBP/CAD | 1.5096 |
| GBP/SGD | 2.0370 |
| GBP/THB | 47.66 |
| GBP/HKD | 11.4824 red-down; blue-up (snap shot) |
These rates are for indication purposes
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker
\n john.georgiou@voltrexfx.com