US Dollar:
Currency markets were still yen led yesterday as equities rallied with investors piling into higher risk trades. This saw the inevitable sell off for the lower yielding currencies of which the dollar is one. Encouraging forecasts from Kraft Foods and McKesson boosted investors expectations of how the corporate factor is faring in the weak economy, helping players move back into riskier trades after the move by the Japanese government to try to stem the rise in its currencies value. The dollar shed over one and a half cents against sterling on Wednesday to push GBP/USD back over the $1.5650 level, and over a cent was lost against the single cur¬rency. In Asian trade, we have seen equities trade lower, so some profit taking may be taking place after such gains yesterday. The dollars gains came against the yen, as USD/JPY rallied to trade at 85.76, but could fall below 85.00 by the end of the global day, as apparent absence of any more Japanese intervention leaves the pair prone to selling by Japanese exporters and other players taking profits.
Data 13.30: PPI m/m 0.3% from 0.2%. 14.00: TIC Long-Term Purchases 37.9B from 44.4B. 15.00: Philly Fed Manufacturing Index 0.9 from –7.7 Speaker 15.00: Treasury Sec. Geithner.
Pound:
The currency board reads all blue below! Sterling rode the ‘risk on’ move well yesterday, benefiting from the Japanese intervention move in the value of its currency, as low yield currencies were sold off globally. This helped push the pound up against its rivals, hitting a four week high against the yen to trade at 134.06. We also saw an impressive two cents gained in the pounds favour against the dollar as cable rallied to trade at $1.5650 as the dollar lost ground against most major rivals. The position against the euro also went in the pounds favour as we pushed back over the 1.20 level. Sterling may nudge higher against the dollar and euro today, but isn’t likely to rise much more because local UK data continues to provide a shaky economic outlook. Looking ahead, data Thursday is expected to show a still-subdued pace of increase in retail sales. Consumers are likely to have been torn between wanting to spend ahead of the sharp rise in the sales tax in January next year, and building up some savings before the bulk of the government spending cuts—and job reductions—are announced, economists say. Data 09.30: Retail Sales m/m 0.3% from 1.1. 11.00: CBI Industrial Order Expectations –12 from –14.
Euro:
The euro jumped aboard the USD/JPY move yesterday as the single currency moved an impressive cent on the greenback to trade back over the $1.30 level. We have seen tight range trading this morning as players wait to see if any more intervention from the Japanese government decide to go back into the markets to try to reign back in the yens strength. The euro didn't have its own way against an also impressive move by sterling, as EUR/GBP fell back towards the 0.83 level. Greece’s debt issues are always hanging around the corner to give the euro a shot of realisation, and to peg back any aggressive move higher for the euro. Greece’s PM has strongly rejected the idea that Athens will be forced to restructure its debts, saying that a default would break the eurozone.
Data 10.00: Trade Balance –0.7B from –1.6B.
General:
• The yen is rallying against the dollar, euro and pound a day after Wednesday’s intervention by Japan in a fleeting bid to control its currency’s safe-have strength.
• Spot gold is down $1.20 at $1,267.00 a troy ounce, after the recent record posted at $1,274.75/oz.
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| GBP/USD | 1.5620 |
| GBP/EUR | 1.2201 |
| EUR/USD | 1.3025 |
| GBP/JPY | 133.40 |
| GBP/AUD | 1.6670 |
| GBP/NZD | 2.1486 |
| GBP/ZAR | 11.0727 |
| GBP/CHF | 1.5630 |
| GBP/CAD | 1.6004 |
| GBP/SGD | 2.0882 |
| GBP/THB | 48.22 |
| GBP/HKD | 12.1314 red-down; blue-up (snap shot) |
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker