US Dollar:
The US dollar was decimated against nearly every currency on Wednesday as risk appetite was cranked up a notch or two with sentiment buoyed by bright corporate earnings by Intel and IBM, which have propelled the energy sector. The Dow Jones and the S+P 500 rose by 1.5% each while the Nasdaq index surged 2%. US economic data released showed existing home sales increased 3.7%, combined with the rally in stocks all helped risk appetite grow, inevitably leading to players to dump the greenback and buy other higher risk curren¬cies. The view that the Fed’s relaxed attitude towards monetary tightening also kept the dollar suppressed as the pound and euro benefit from a more hawkish view on possible interest rates rises later in the year. Cap that off with the credit quality concerns raised by Standard and Poor’s and there is very little reason for investors to hold, let alone buy US dollars.
Data 13.30: Building Permits 0.55M from 0.52M.
Pound:
Sterling is closing out the week mixed as we see huge gains for the pound against the dollar but a fall against the euro, which took the gloss of the UK currencies trading day yesterday. The surge in value for cable came as global risk appetite gained momentum, buoyed by strong corporate earnings from major US compa-nies, leading to year high readings for global equity markets. This led to a sell-off for the greenback as investors looked for better returns, dumping the buck and buying pounds and euros. We saw a 15 month high breached as GBP/USD broke through the $1.6450 level which helped Voltrex clients limit orders placed via their online access platform strike out. The downside of such a big rise in risk appetite could be seen in the pounds value against its European cousin as we saw GBP/EUR fall throughout the trading day. Although a gain in risk did help the pound, more buyers of euros flooded the market with he perception of interest rate differential’s be¬tween the two currencies leaning towards the euro. The pound slumped against the single currency as minutes of April’s Bank of England meeting indicated most policy makers through the past months data indicated a weaker economy, damping prospects for tighter monetary policy. Investors pushed back bets on when the BoE will raise rates, with some now expecting a rise later in the year, even as late as November. The reason why this is so intrinsically linked to the value of the currency is a rate rise would normally lead to a flow of funds in¬vested in that currency as higher returns would be realised. No major data.
Euro:
An impressive way to close the week is being played out by the euro despite the turmoil seen at the be-ginning of the trading week. Strong gains in global equities saw a sell-off for the dollar and funds flowed into the single currency and other higher risk currencies. Interest rate differentials are seen as a major factor in why cer¬tain currencies are rallying more than others, flying in the face of economics and macro data. Because the ECB have already raised rates once this year and expected to move again, before other central banks, the euro is seen as a better place to park your cash over the dollar and pound. We saw a 16 month high posted this morn¬ing for the euro over its US counterpart as EUR/USD hit $1.4630. Against sterling there was a gain of nearly 1% as EUR/GBP fell from 0.8805 to 0.8880 after the BoE minutes were released, pointing to no immediate rate rise in the UK. Data 10.00: CPI y/y 2.6& d.
General:
· Stock markets around the world staged their biggest rally of the year while gold surged to a new high.
For more information or to request a call back click here
| GBP/USD | 1.6480 |
| GBP/EUR | 1.1265 |
| EUR/USD | 1.4631 |
| GBP/JPY | 135.31 |
| GBP/AUD | 1.5336 |
| GBP/NZD | 2.0579 |
| GBP/ZAR | 11.1415 |
| GBP/CHF | 1.4559 |
| GBP/CAD | 1.5621 |
| GBP/SGD | 2.0359 |
| GBP/THB | 49.33 |
red-down; blue-up (snap shot)
These rates are for indication purposes only.
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker