US Dollar:
A move into less riskier assets saw the dollar continue its recent march higher against the pound and euro last week, although a small move in sterling's favour has seen cable recover a little on Monday. The dollar took nearly five cents of the euro last week, hitting $1.2731 as players shunned the single currency in favour of the less risky greenback. Cable also remained under pressure with three cents given up in the dollars favour.
Against the Japanese yen, the dollar is lower as the shift towards less riskier assets has seen the Japanese currency come out on top. This has also come on the back of Japans weaker than expected GDP numbers. The dollar is expected to weaken even further against the yen and may fall below its all time low of Y79.75 in the near term. US economic reports this week will cover July housing starts, building permits and the producer price index.
Data 14.00: TIC Long Term Purchases 36.3B from 35.4B. 15.00: NAHB Housing Market Index 15 from 14.
Pound:
The UK pound is showing resilience against the euro, which held its own last Friday against the single currency despite strong GDP numbers from Germany and also the eurozone. The pounds strength against the euro has been tested even more this morning after weaker than expected UK house price data, with GBP/EUR testing the 1.22 level. Against the dollar, sterling is expected to trade with a bearish bias in the greenbacks fa-vour. The pair is undermined by higher investor risk aversion, stronger dollar sentiment and the 1.7% on month drop in the Rightmove mid-August house price index. The biggest monthly decline in the house price data since December 2009, raising concerns over the negative impact of fiscal tightening on UK economic growth. This fall in UK house prices has shown how well the pound has performed against the single currency, as the risk aver¬sion move seems to have hurt the euro a lot more than sterling.
Data: All quiet on the UK front
Euro:
Friday’s better than expected German and eurozone data have failed to provide lasting gains for the common currency, making some analysts wonder if the euro is set to suffer significant further losses against the dollar. The run for cover in safe haven currencies has also led to further euro weakness Monday after weak Japanese GDP data saw funds flow from the euro to the safe haven dollar and yen. There is still no rest bite against the British pound as range trading is still the order of the day, although a small move against the euro has been seen this morning as the 0.82 level has been tested.
Data 10.00: E/Zone CPI y/y 1.7% unchanged & Core CPI y/y 1.0% from 0.9%.
General:
• The Japanese yen has ruled the roost in currency markets as the shift towards safe haven assets takes hold. It looks like the Nikkei 225 may fall below the 9,000 mark in the weeks ahead. If that happens, cur¬rency investors may start fierce yen buying as a result of risk aversion.
• Oil prices are mixed Monday as concerns over US and Chinese economies weighed on crude markets. New York’s main contract, light sweet crude was up nice cents to $75.48 a barrel.
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| GBP/USD | 1.5629 |
| GBP/EUR | 1.2172 |
| EUR/USD | 1.2831 |
| GBP/JPY | 134.15 |
| GBP/AUD | 1.7642 |
| GBP/NZD | 2.2131 |
| GBP/ZAR | 11.6689 |
| GBP/CHF | 1.264 |
| GBP/CAD | 1.6207 |
| GBP/SGD | 2.1270 |
| GBP/THB | 49.69 |
| GBP/HKD | 12.1348 red-down; blue-up (snap shot) |
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker