US Dollar:
The greenback has started the week off not too dissimilar from last week’s play– as risk continues to remain in the currency markets. Against both the pound and euro there remains weakness after the USD/JPY move seen at the beginning of last week. The biggest economic event of the week ahead is undoubtedly the Fed decision. The debate has been focused on whether it is going to sanction more quantitative easing. Analysts expect the Fed to leave rates unchanged, noting that the degree of market panic over the risk of a double dip recession seems to have subsided in the past month after a string of decent US data. Investors in Sydney had little incen¬tive to take on more risk ahead of US housing starts data for August and tomorrow’s Fed decision. Later this week, a number of reports on US housing data for August are expected to show more recovery from a dismal July, although sales are still poor as the industry continues to suffer from weak fundamentals.
Data 15.00: NAHB Housing market Index 14 from 13.
Pound:
Friday saw sterling hit a five week high against the dollar as players continued to sell the low yielding currencies against the pound and euro. This came on the back of the USD/JPY move earlier in the week, as huge sums of yen were sold in favour of more riskier bets, funding currencies such as the pound and euro. On the back of this move, we have seen a little weakness on sterling against its European counterpart, as more funds seem to have been funded into the single currency. A report did give some support to the pound, as the UK’s leading business lobby group offered strong backing to the governments austerity measures Monday, saying planned spending cuts and tax hikes wouldn’t send the country back into recession. The UK housing market is however not doing so good, which can have an adverse effect on the UK currency. UK house prices fell in September for the third straight month, as potential buyers remained in short supply and the number of new properties for sale rose again—according to Rightmove online estate agency.
Euro:
Major currency pairs are hardly changed Monday, with Japan off on holiday, but the euro remains vulnerable with worry about Ireland lingering. The single currency gained last week against the dollar and to a lesser ex-tent, sterling, after the Japanese intervention in currency markets, but did weaken slightly on Friday after con-cerns about Ireland’s bulging fiscal deficit, but it looked like the situation wasn’t as bad as feared. Irish Finance Minister Brian Lenihan denied reports of Ireland having to eventually seek outside help of losses mount in its banking sector. He referred to a note from Barclay’s bank analysts that had suggested Ireland could eventually have to tap the IMF or WEU for help. An IMF spokeswomen Friday also said the IMF doesn’t see Ireland need¬ing any financial assistance from the institution.
Data 09.00: Italian Trade Balance –1.37B from –3.06B.
General:
• Spot gold is at $1,278.50 a troy ounce, up $3.80 from Friday’s N.Y. close. Gold posted a record high of $1,282.90/oz Friday, and according to Deutsche Bank in weekly commodities review—has further to go.
• The International community has postponed bank stress tests for Greece to give the country breathing space as Athens prepares to test the success of its European road show last week by raising more money in the capital markets.
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| GBP/USD | 1.5646 |
| GBP/EUR | 1.1929 |
| EUR/USD | 1.3113 |
| GBP/JPY | 133.81 |
| GBP/AUD | 1.9520 |
| GBP/NZD | 2.1403 |
| GBP/ZAR | 11.13811 |
| GBP/CHF | 1.5701 |
| GBP/CAD | 1.6118 |
| GBP/SGD | 2.0243 |
| GBP/THB | 48.08 |
| GBP/HKD | 2.1408 red-down; blue-up (snap shot) |
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker