US Dollar:
It was an efficient transition for dollar bears today. In the early, pre-US trading hours Thursday, the greenback was weighed by a boost in sentiment that undermined the currency’s status as a safe haven. And, just as that speculative boost began to fade, the US docket would take a fundamental approach to extending the dollar’s bearish drive with an assault on growth and interest rate forecasts for the world’s largest economy. Though not one of the top economic indicators for the US docket, the initial jobless claims report for the week ending June 12th stirred interest that has been particularly sensitive to relative growth potential in recent weeks. According to the report, first time filings for unemployment benefits rose to a 472,000 pace last week the fastest clip in a month. Another notable reading released at the same time was the first quarter current account balance which swelled to a $109 billion on a significant increase in physical trade. Neither of this figures should come as a surprise really but vested against the relatively robust performance of the May Leading Indicators composite, this mix confirms that activity is uneven. This may not be of dramatic concern just yet but when lending cools, stimulus is withdrawn and rates rise, the economy’s stability will be tested. If this was a trial that occurred today, the US economy would likely fail in dramatic form given the absence of robust consumer spending, business investment and trade.
DATA : No major data to be released today
Pound:
There were a few economic releases for the pound to take in Thursday; though the impact these numbers had was modest. The government’s retail sales report would come out better than expected with a 0.5 percent pick up though this report is remarkably volatile. A the same time, the CBI Industrial Trends figure slipped but from its highest level since August 2008. In the end, the real interest was in the government’s announcement of a little fiscal housekeeping. The Secretary to the Treasurer reported 8.5 billion pounds in planned spending was halted and another 2 billion pounds active projects was cut. Slow progress on a massive shortfall. Traders patiently await the 22nd’s emergency budget.
DATA : No major data to be released today
Euro:
There was little on the European docket and investors in the time zone weren’t really concerned with anything other than Spain’s debt auction. After days of speculation that the country was trying to work out a 250 billion euro financial aid package with the same authorities that had helped Greece, news that the 3.5 billion euro sale of 10 year notes and 30 year bonds went well was met with relief. Not only would the country successfully raise the necessary funds; but the yield established was lower than the previous auction and demand went well beyond what was expected. Yet, there is still reason for doubt. It is well known that the ECB is buying government bonds to ease tension in the credit markets. If they had supplemented lacking private interest, this event would be far less inspiring. Furthermore, the Spanish government still has 24.7 billion euros in liabilities coming due next month and the countries financial health may still require assistance from deep pockets.
DATA : No major data to be released today
General:
If we look at interest rate expectations as priced into the market by Credit Suisse overnight index swaps, we see that there is a 82 percent chance of a July rate hike from the RBNZ and 139 bps of cumulative hikes expected over the coming 12 months. Yet, the kiwi struggles to take the lead on risk positive days. Data like Thursday’s drop in June consumer confidence levels tells us why doubts persists.
For more information or to request a call back click here
| GBP/USD | 1.4870 |
| GBP/EUR | 1.1990 |
| EUR/USD | 1.2405 |
| GBP/JPY | 135.09 |
| GBP/AUD | 1.7099 |
| GBP/NZD | 2.1060 |
| GBP/ZAR |
11.2028 |
| GBP/CHF | 1.6505 |
| GBP/CAD | 1.5261 |
| GBP/SGD | 2.0629 |
| GBP/THB | 48.09 |
| GBP/HKD | 11.5812 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