US Dollar:
Currency traders were holding their breath overnight as they waited to see what quality of market activity they would see with the return of liquidity. Would the lull in activity over the extended holiday weekend for the US and UK encourage more a more ‘rational’ investment approach that curbs erratic swings and pro-motes stable trends; or would the high level of volatility that defined markets last week return along with a pro-clivity for speculative shifts in the fundamental backdrop? Despite the relative quiet seen yesterday; volatility and speculative interests would come roaring back to life on this first truly active trading day of the week. And, playing its part as the preferred safe haven among the FX crowd, a morning drop in investor confidence would temporarily push EURUSD below the mid-point of its historical range at approximately 1.2135. This slump how¬ever would not last; and a possible move to usher currencies towards their next major trend and push the Dow Jones Industrial Average below the closely-watch 10,000 level would ultimately retreat to less critical levels.
DATA : Pending home sales
Pound:
While the sterling would put in for a mixed performance against its most liquid counterparts today, the most remarkable move was the EURGBP’s drive below a long-term support level at 1.20 and peaking at 1.2076. Against the Greenback we also saw some long term levels being broken and levels as high as 1.4770 being touched. This is a sign that the UK is not simply being grouped with the EU and an inherent confidence at least relative to the Euro-area was building behind the new British government’s effort to stabilize the country’s finan¬cial position.
DATA : No major data to be released today
Euro:
When financial markets are panicked and confidence absent, it is policy makers’ task to restore stability and poise with optimistic forecasts. The alternative could be devastating. This is one of the primary reasons why most European officials have taken such an upbeat view on Greece and the regional economies. However, as conditions settle and the markets seem robust enough to endure the truth, the façade is dropped. This is where the dose of reality from the ECB would come from this morning. The central bank, in its Financial Stability Re¬view, warned that both European governments and regional banks would have to roll over large amounts of debt in the coming years, which could pit the two spheres against each other in an already stretched market. Another facet to this report was an estimate that financial institutions may have to write off as much as 195 bil¬lion euros in bad loans by the end of 2011. As if to further the point of financial struggle, Standard & Poor’s re¬leased its own report that assessed the housing sector in the region was still far too overvalued. This is just stress fracture in the colossal effort to stabilize the European Union that joins economic recession and social unrest. On the data front, the drop in German unemployment was impressive as the 45,000 net decline was the 11th consecutive improvement. Alternatively, a record 10.1 percent jobless rate for the EZ dampens optimism.
DATA : No major data to be released today
General:
• As expected, RBA left the benchmark unchanged after six hikes since the last financial crisis tapered off but the commentary was a little more hawkish than was allowed. Noting patience in the “near term” opens the doors for a possible return to hikes in the third or fourth quarter.
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| GBP/USD | 1.4756 |
| GBP/EUR | 1.2052 |
| EUR/USD | 1.2240 |
| GBP/JPY | 135.28 |
| GBP/AUD | 1.7661 |
| GBP/NZD | 2.1789 |
| GBP/ZAR | 11.3310 |
| GBP/CHF | 1.7023 |
| GBP/CAD | 1.5493 |
| GBP/SGD | 2.0800 |
| GBP/THB | 47.56 |
| GBP/HKD | 11.497 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