US Dollar:
The dollar started selling off days ago on the theme of shifting from just a European crises to a global slowdown. For the greenback its going to be tough in the short term, as the euro has had a rest bite from negative headlines and investor sentiment is easing toward the lingering crises of eurozone sovereign debt, at least in the near term. Fridays nonfarm payrolls figures did little to help the recent fall in the value of the dollar as the buck remains under pressure from both the pound and euro. Private employers added only 83k jobs in June, too few to keep up with growth. The unemployment rate fell to 9.5% from 9.7%, but only because of hun¬dreds of thousands of Americans dropped out of the labor force entirely. Combined with other recent data, the numbers depict a sluggish economy in which nearly 15m people are out of work and job growth is mediocre. A report from the Telegraph on Saturday emphasized the problems the dollar has been facing recently, as fresh fears over a global economic slowdown were raised after Goldman Sachs chief economists warned that data from China and the US revealed that any recovery was facing a challenging period and that evidence from America was troubling. US markets closed for Independence Day.
Pound:
Currency majors are in tight ranges with traders sidelined due to the closure of US markets today. No one is going to want to take too much of a position, liquidity is going to be terrible. This can be seen in the movements of sterling against both the dollar and euro over the last few days and highlighted in the graph be-low. Cable has stayed in-between a tight range of $1.5180—$1.5228 and GBP/EUR trading in-between 1.2050—1.21. We have now seen a big fall in short selling of Sterling since the emergency budget, with hedge funds and speculators closing their positions that anticipated further falls in the value of sterling. Short selling of the pound hit record levels following the formation of the coalition Government with the number of sell contracts reaching 76,745 amid fears that political uncertainty would hamper attempts to tackle the deficit. But sterling has risen sharply against the dollar over the past month. The pound is up 8 cents or 5.7% against the dollar since hitting a low of $1.43 on June 8th. On Friday it closed up 0.77 Cents at $1.5190. Looking ahead, the Bank of England’s MPC meets this week and is forecast to keep both interest rates and its bond buying on hold at 0.5% and £200bn, respectively. Data 09.30: Services PMI 55.1 from 55.4.
Euro:
The euro held onto its recent gains against the majors late last week, despite net speculative bets against the euro increasing to a net value of $11.2 bn in the weak ended Tuesday, from the previous week’s $10.9bn. The increase likely set the common currency up for the squeeze higher it experienced later last week. As senti¬ment on the eurozone debt crises improved, investors likely unwound their bets against the euro, driving the common currency higher. As investors have become more confident about the European banking system, they have shed their anti-euro bets funded in gold, buying back euros and selling the metal, and that is likely to have also given the euro a boost. If fears continue to subside, then it is likely that there will be more liquidation of the gold euro trade. The euro should trade this week between $1.24 and $1.2650 analysts said, with the common currency likely to stabilize around $1.25 against the dollar in the near term. But, in the long haul, we expect the market to return to the eurozone debt story again, eventually sending the euro closer to parity with the dollar. Looking ahead, we have the ECB interest rate meeting this week and the results of European bank stress tests to be published around July 23rd. Data 09.00: E/Z Final Services PMI 55.4 unchanged, 09.30: Sentix Inves¬tor Confidence –4.5 from –4.1
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| GBP/USD | 1.5173 |
| GBP/EUR | 1.2110 |
| EUR/USD | 1.2545 |
| GBP/JPY | 133.42 |
| GBP/AUD | 1.8004 |
| GBP/NZD | 2.1972 |
| GBP/ZAR | 11.72006 |
| GBP/CHF | 1.6133 |
| GBP/CAD | 1.6112 |
| GBP/SGD | 2.1131 |
| GBP/THB | 49.17 |
| GBP/HKD | 11.8247 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
\n john.georgiou@voltrexfx.com