US Dollar:
The U.S. dollar remains on the back foot as poor data continues to flood the market. Fridays re-lease of Q2 GDP showed the US growth rate slowed considerably from 3.7% to 2.4% annualized. The slow down wasn’t a big surprise to analyst s as it mealy confirmed the data they had extrapolated from the various leading indicators. Today’s release of the ISM index will give a more complete picture of the manufacturing sector and if early forecasts are any indication then we could see further Dollar weakness as economists are expecting a decline to 54.0 from 56.2. Additionally, forecasts for non-farm payrolls to decline by 60,000 could also be a source of concern. This continued slew of poor data has already prompted several banks to alter their expectations for the US base rate, with the consensus for rate rises being pushed to Sept 11 from April 11 and one bank, Nomura has called for the FED to bring back QE on August 11th albeit in a watered down format.
DATA – USD ISM Manufacturing (JUL)
Pound:
The British Pound has ended last week higher against the greenback closing just below 1.57 and opening this morning is positive territory as well. Supporting the Pound this morning is the release of a Goldman Sachs report claiming that the UK recovery will outpace that of the US, EU and Japan. Data releases on Friday showed UK growth for Q2 almost doubled that of the US. For this upcoming week, the Bank of England is ex¬pected to release their asset purchase target and its key overnight lending rate on Thursday. As both readings are expected to remain unchanged, price action will likely be muted as traders will wait for the BoE minutes on August 18th in order to gain a grasp of policy direction going forward. During last month’s meeting, Andrew Sen¬tance voted against the majority and pushed for a rate hike. Even though other members have yet to accom¬pany Sentence’s call for an increase in rates, they did note that the recent value added tax measures which will begin 2011 are likely to upward pressure on inflation.
DATA—PMI (JUL)
Euro:
On the surface, things are looking up in the euro economy and this is reflected it current ranges against the major currencies. Euro zone economic sentiment, reports the European Commission, hit a 28-month high in July. Little wonder, the area's retail sales rose in July for the second consecutive month and at the fastest rate in two years, driving employment in that sector up for the first time since March 2008. The area's output picked up in both the service and manufacturing sectors, with manufacturing leading the way. German unemployment is at 7.6%, lower than it has been since November 2008. The recent EU stress test which were marked as make or break appear to have passed with out problem despite the results being questionable. Despite this we feel that the outlook can and will quickly change as huge fiscal deficit across Club Med come into play an the inflexibility of the one size fits all monetary policy finally delivers its knock out blow.
DATA— EUR PMI FRA, GER ITL (JUL)
General:
The UK economy has lost nearly 1m full-time jobs after a dramatic shift to part-time working since the start of the recession the CIPD says.
For more information or to request a call back click here
| GBP/USD | 1.5784 |
| GBP/EUR | 1.2080 |
| EUR/USD | 1.3062 |
| GBP/JPY | 136.92 |
| GBP/AUD | 1.7322 |
| GBP/NZD | 2.1563 |
| GBP/ZAR | 11.4622 |
| GBP/CHF | 1.6529 |
| GBP/CAD | 1.6143 |
| GBP/SGD | 2.1376 |
| GBP/THB | 50.60 |
| GBP/HKD | 12.25 red-down; blue-up (snap shot) |
These rates are for indication purpose
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker
\n john.georgiou@voltrexfx.com