Pound: Indeed, the initial reaction to the Bank of England interest rate decision pushed the GBP/USD down to 1.6399 as the central bank looks to carry its wait-and-see approach into the second-half of the year, and the exchange rate may continue to trend sideways ahead of the meeting minutes due out on June 22 as it maintains the range from earlier this month. The statement is likely to show the majority maintaining a cautious outlook for the region given the recent slowdown in the economic recovery, and the Monetary Policy Committee may see scope to keep the benchmark interest rate at 0.50% while holding the asset purchase target at GBP 200B in the third quarter as the ongoing slack within the real economy is expected to bear down on inflation. Although the central bank expects price growth to reach 5% in 2011, BoE Governor Mervyn King may retain a relatively dov¬ish tone for monetary policy, and the sterling will certainly struggle to hold its ground should the MPC talk down speculation for higher borrowing costs in the U.K. In turn, the rebound from the end of May certainly remains at risk, and the GBP/USD could make another run at 1.6000 as the committee looks to support the real economy for most of the year.
DATA : Manufacturing production and PPI Input.
Euro: Heading into the central bank’s closely-watched policy meeting, market participants had already written off any chance for a change in the benchmark lending rate at the July gathering. Instead, the focus would be on the statement and President Jean Claude Trichet’s commentary for guidance on the authority’s pace. The more contentious “strong vigilance” phrase considered central-bank speak for a hike at the next meeting was present but that too seems to have been fully priced in. Looking beyond the July decision, the market dubiously latched on to the outlook for inflation to drop below the central bank’s target in 2012. Furthermore, concern for the re¬gion’s financial health flared up again. Reports quoted unnamed officials who projected Greece needs 170 bil¬lion euros in additional aid from 2012 to 2014 while Moody’s said a Greece could hit Ireland and Portugal.
DATA : No major data to be released today.
Dollar: Through the economic docket filled out this past trading day for the US dollar, the influence of the col-lective event risk was still too light to jumpstart a genuine trend. Market activity for the dollar, currencies and broader financial markets is still too thin to instigate lasting runs. This is a reality that some traders are acclimat¬ing to and subsequently lowering their requirements for calling a significant move for the greenback. When it happens, an authentic trend for the benchmark currency will develop alongside meaningful drives in other asset classes and it will certainly be backed by a tangible fundamental catalyst even if that spark happens to be a pure shift in collective sentiment. The Dow Jones FXCM Dollar Index advanced 0.2 percent from the previous session’s close, clearing this week’s range high at approximately 9,510. Looking at the currency’s performance against specific counterparts, we note that the greenback lost ground against commodity bloc the Canadian, New Zealand dollars but advanced against fellow safe havens Swiss franc, Japanese yen, the Euro and pound.
DATA : No major data to be released today.
General: The trading range on gold continues to contract on a near-daily basis. This reduced activity level is also showing through in futures volume and volatility readings. A lack of conviction while the metal is still head¬ing higher is a disconnect that raises the risk of a major reversal. The most threatening, potential catalyst for a reversal remains the health of the commodity’s primary alternative – the US dollar.
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GBP/USD 1.6294
GBP/EUR 1.1255
EUR/USD 1.4478
GBP/JPY 135.50
GBP/AUD 1.5373
GBP/NZD 1.9745
GBP/ZAR 11.0123
GBP/CHF 1.3725
GBP/CAD 1.5889
GBP/SGD 2.0065
GBP/THB 49.24
GBP/HKD 12.6874
red-down; blue-up (snap shot)
These rates are for indication purposes only.
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