US Dollar:
Concerns about a double dip recession in the US continue to dominate market sentiment, and last weeks poor US economic data didn’t help change this view. Cash preservation is the name of the game with a number of investors downsizing their long positions in riskier stocks such as miners and the banks. A rush for cover into such less riskier assets saw the dollar strengthen against the pound and euro, but continue to be un-der pressure against a rampant yen. Wall Streets late come back on Friday and a positive Asian close did see the dollar give up some of its gains against the pound with over a cent lost to push GBP/USD close to the $1.56 level, but the buck is still holding the single currency firmly in its grasp. The US agenda has some key markers this week. More retailers will report quarterly results this week after many in the industry in recent days have described shoppers as buying only what they need as the economy has weakened. Economists expect the sec¬ond quarter gross domestic product figure will be revised down to 1.4% growth from 2.4% when the report is issued Friday No data. Speakers 15.30: FOMC Member Hoenig.
Pound:
Sterling has performed well against the euro of late and Friday’s sell off in the value of the single cur-rency helped push GBP/EUR over the 1.22 level. We have seen this continue in Asian trade Monday as an eight week high of 1.2278 was breached this morning. The pound has been helped by recent upbeat UK data which has served it well in the recent safe haven moves out of higher yielding currencies including the pound and into the yen and dollar. Last week saw cable fall on this safe haven move with GBP/USD falling below the $1.55 level. We have seen a small recovery in cable this morning, as Asian markets followed Wall Streets late rally with some players moving out of the dollar and into other currencies including sterling. Cable has now moved back over the $1.55 level, and has tried to test the $1.56 mark. Sterling is likely to hold steady against the dollar Monday, but may find itself under a little pressure from the euro, following the single currencies steep loses Friday. Data: Not a sausage
Euro:
A weakening euro on Friday reminded investors of lingering sovereign debt concerns and added to the weeks push and pull between encouraging corporate news and weaker than expected economic data. Investors caution ramped up sharply over the past couple of days, providing some safe haven support for the dollar against the euro. The pressure on the single currency also saw the euro falter against sterling, as EUR/GBP fell below the 0.8150 level, the fist time since the end of June. The speed of the European Central Bank’s with¬drawal from its anti crises measures will depend on the healthy of the eurozones banks, Deutsche Bundesbank’ President Axel Weber said in an interview with Bloomberg TV on Friday. Looking ahead, the preliminary esti¬mate of the eurozone manufacturing and services indexes for August are due today, expected to show a mar¬ginal slowdown from the expansion in July, led mainly by a slower pace of growth in France. Data out this morn¬ing showed German Manufacturing PMI at 58.2 and German services PMI at 58.5.
Data 09.00: E/Zone Flash Manu. PMI: 56.3 from 56.7, Services PMI 55.6 from 55.8.
General:
• The Australian dollar is under pressure today as uncertainty in the who will govern the country weighs on the cur¬rency. Shares in Sydney were resilient despite the news that no overall winner was chosen to run Australia's next government after the country followed the UK in choosing a hung parliament.
• The yen gained ground after Kyodo reported Bank of Japan Governor Masaaki Shirakawa and PM Naoto Kan held talks by phone on Monday to exchange views on recent developments in financial markets.
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| GBP/USD | 1.5581 |
| GBP/EUR | 1.2271 |
| EUR/USD | 1.2693 |
| GBP/JPY | 132.95 |
| GBP/AUD | 1.7470 |
| GBP/NZD | 2.2089 |
| GBP/ZAR | 11.3544 |
| GBP/CHF | 1.3544 |
| GBP/CAD | 1.6105 |
| GBP/SGD | 1.6311 |
| GBP/THB | 48.98 |
| GBP/HKD | 12.1089 red-down; blue-up (snap shot) |
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John Paul Georgiou
Senior Foreign Exchange Broker
j \n ohn.georgiou@voltrexfx.com