US Dollar:
Europe’s debt fiscal woes and worries about the US recovery continued to hammer the markets psyche on Mon¬day. US and European markets got smashed last week as risk aversion swept through the markets to rally the dollar. Recent talk of a possible sovereign default by Hungary, which sent the Hungarian currency and bonds crashing last week saw funds flow from the more riskier currencies and into the normal safe haven currencies. Asian stock markets tumbled this morning, dragged down by weak US employment figures and fresh European debt fears. The US government’s May jobs report showed Friday the US economy created 432k jobs last month, far fewer than the expected 513k. The result underlined that the US economic recovery is not yet picking up the momentum that investors have been looking for. The Dow Jones plunged Friday 3.2% with most major indexes losing more than 3%, which in turn saw massive support for the dollar and yen.
No major data.
Pound:
The pound hit a year and a half high against the euro in Asian trade this morning as fears the European debt crises is spreading to Hungary hit the markets and the single currency particularly hard. Sterling, now mixed, is likely to trade with risks skewed lower. Sterling is undermined against the dollar by capital flight to the safe-haven greenback on heightened investor risk aversion, as well as concerns over a long period of slow eco¬nomic growth in the UK as the government’s fiscal tightening measures weigh. Sterling could however tip higher against the euro on technical's. This week investors are looking to push out expectations for monetary tighten¬ing after US data on Friday dented forecasts for an accelerating global recovery. The Bank of England meets Thursday to discuss the level of interest rates and its bond-buying program, which is currently on hold. Econo¬mists are unanimous in expecting no change in either level—0.5% for interest rates and GBP200 billion for the asset purchase facility.
No major data. UK PM to discuss austerity measures.
Euro:
The euro marked a fresh four-year low against the dollar at $1.1882 as headlines out of Hungary renewed con¬cerns that the eurozones fiscal and debt problems could spread beyond Greece and Spain. The euro hit its low¬est level in more than eight years against the yen at Y108.83. Against sterling we saw a one and a half year low posted as EUR/GBP hit 0.8240. With the pressure on the common currency set to persist, key levels are coming into sight, in particular the $1.1800 mark, regarded as psychologically significant as this is the level at which the euro exited its first trading day on Jan 4, 1999. it would also be a decisive move under $1.20, which is the 10 year average for the euro against the dollar. Analysts expect the euro to trade in a range between $1.18 and $1.23 this week. Today we have a meeting of European Union finance ministers and on Thursday we have the meeting of the European Central Bank. Investors are looking for guidance on the murky eurozone debt crises.
Data 11.00: German Factory Orders m/m –0.1% from 5.0%.
General:
• The strengthening of Japan’s yen was weighing on exporters, analysts said, as it makes their products more expensive overseas and reduces their repatriated profits.
• Oil was down $1.33 at $70.18 per barrel due to doubts about the strength of the US recovery.
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| GBP/USD | 1.4431 |
| GBP/EUR | 1.2105 |
| EUR/USD | 1.1928 |
| GBP/JPY | 132.01 |
| GBP/AUD | 1.7741 |
| GBP/NZD | 2.1774 |
| GBP/ZAR | 11.3134 |
| GBP/CHF | 1.6819 |
| GBP/CAD | 1.5380 |
| GBP/SGD | 2.0470 |
| GBP/THB | 47.08 |
| GBP/HKD | 11.4075 |
These rates are for indication purposes
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker
\n john.georgiou@voltrexfx.com