US Dollar:
The US dollar was not weak Monday but neither was it particularly strong. Much like the underperformance of equities through the day, the fundamental and speculative interest for the benchmark currency was relatively mute. This is not to mean though that nothing of substance had occurred on the day. In fact, exactly the oppo-site is true. The news headlines and economic data on tap were particularly important for the medium and long-term health of the currency and financial markets in general. Yet, considering investors are far less sensitive to the ebb and flow of crisis banter, the stress would be prominent only for those pairs that are most exposed to the uncertainty that lies ahead. In this assessment, it was easy to mark the EURUSD’s tumble as the green¬back’s best performance.
DATA : Consumer confidence
Pound:
Without the influence of exogenous event risk, the British pound would have most likely experienced a choppy performance on the day. The only economic data on tap was the Hometrack Housing Survey for June and the lesser housing report would merely tick higher on an annual basis in its release well before actual trading began in London. Far more interesting for traders was the commentary from MPC member Andrew Sentance. The central bank reportedly suggested that the budget changes didn’t remove the need for a rate hike and a gradual increase would be better than a disruptively large increase later down the line. This is yet further evidence the BoE will move before the Fed.
DATA : No major data to be released today
Euro:
The euro was exceptionally weak against most of its primary counterparts Monday. Assessing the situation, the biggest percentage declines would be tallied in EURCHF, EURGBP and EURUSD. This relative performance tells us that the euro was under pressure from a risk perspective with the safe haven dollar and franc appreciat¬ing as well as for its lack of fundamental potential against the sterling. Those trying to assign the euro’s troubles to the data on the calendar would only see half of the story. The German consumer inflation and Euro Zone money supply figures were certainly important. The German price gauge cooled to a 1.2 percent annual clip well below the ECB’s target two percent while the regional M3 report the central bank’s favoured inflation reading marked deflation for the seventh month. This curtails any hope of rate hikes in the near future. More important than these indicators are the countdowns for the week. By the month’s end, indexes with sovereign debt expo¬sure will have to dump their Greek holdings due to its junk status. Perhaps the greater threat is the expiration of the ECB’s LTRO program on July 1st. This will require regional banks to buy bank 442 billion euros in bonds.
DATA : No major data to be released today
General
In an otherwise restrained day for the risk-sensitive currencies and asset classes, the kiwi dollar would put in for a remarkable performance. The currency tumbled against both safe havens and high-yield peers Monday after a survey reported a significant drop in business confidence. The headline figure dropped to a five-month low 40.2 while investment, employment and profit expectations took similar dives.
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| GBP/USD | 1.5091 |
| GBP/EUR | 1.2322 |
| EUR/USD | 1.2244 |
| GBP/JPY | 133.98 |
| GBP/AUD | 1.7447 |
| GBP/NZD | 2.1491 |
| GBP/ZAR | 11.4491 |
| GBP/CHF | 1.6409 |
| GBP/CAD | 1.5677 |
| GBP/SGD | 2.1001 |
| GBP/THB | 48.62 |
| GBP/HKD | 11.74 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