US Dollar:
The dollar saw continued weakness against the single currency yesterday, touching above the $1.3650 level as worries over more QE2 by the Fed remained in traders minds. The greenback did recover somewhat after up¬beat data buoyed hopes of a pick up in US economic activity in the third quarter. Thursday’s encouraging US data, in the form of the ‘Chicago-area purchasing managers report’ gave rise to the possibility that Fed policy easing is not yet a done deal. US stock futures are modestly higher Friday, after markets slipped Thursday, end¬ing the markets strongest September in 71 years on a down note. Thursday’s data helped the dollar position against an under-fire pound, as the greenback took a whopping two cents off the pound. The market paused from Thursday's rally as investors treaded cautiously ahead of a new month and a new quarter that will kick off with manufacturing data from the Institute for Supply Management today.
Data 13.30: Core PCE Price Index m/m 0.1% unchanged. 13.00: ISM Manufacturing PMI 54.6 from 56.3.
Pound:
Sterling was looking bid yesterday morning as cable rallied an impressive cent and hit over the $1.59 level, but then came the tipping point as ’falling over the edge of a cliff’ seemed an appropriate phrase to use. We saw the pound dump over two cents against the greenback to push GBP/USD down below the 1.57 handle, as better than expected US data helped ease the fears of another bout of QE from the Fed, which had been hanging round the dollars neck. It seemed all eyes now focused on the pound, as it may be the first to call on turning on the printing presses, usually seen as a negative against that country’s currency. We also saw the pound collapse against the euro, as GBP/EUR went below the 1.16 handle, and has been tinkering with falling under the 1.15 level this morning. Friday’s agenda includes UK PMI Manufacturing data at 09.30, and of course, the Ryder Cup which got on the way this morning at 07.45. Currently Europe is 1up in first two matches!Data 09.30: ISM Manufacturing PMI 54.6 from 56.3.
Euro:
The euro stood firm yesterday, despite a raft of bad economic news being thrown in its direction in the form of Spain’ s downgrade by Moody’s and more damming news regarding Ireland’s bank bailout. The single currency continued its march against the dollar, hitting $1.3660 as flows of funds continue to leave the safety of the greenback, and the only perceived place to park it seems to be the single currency. Moody’s downgrade of Spain by one notch to Aa1 and a higher that estimated bailout for Anglo Irish Bank buffeted the euro somewhat, but as the currency charts for EUR/USD and EUR/GBP show, did not take it down as much as the news should of. Friday’s agenda for the eurozone brings PMI manufacturing data at 09.00, which could influence trading de¬cisions going into the weekend.
Data 09.00: Final Manufacturing PMI 53.6 unchanged.
General:
• China’s official manufacturing Purchasing managers Index for September improved to 53.8, compared with 51.7 in August. That helped ease worries of a potential slowdown in the economic juggernaut, rein-forcing the view that China is still steaming ahead. This helped support the commodity currencies such as the Aussie dollar and Rand, which saw more gains against sterling.
• Crude prices pushed through the $80 mark in Asian trade this morning on better than expected US em-ployment numbers and as protests rocked oil-producing nation Ecuador.
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| GBP/USD | 1.5755 |
| GBP/EUR | 1.1525 |
| EUR/USD | 1.3661 |
| GBP/JPY | 131.35. |
| GBP/AUD | 1.6258 |
| GBP/NZD | 2.1307 |
| GBP/ZAR | 10.9801 |
| GBP/CHF | 1.5458 |
| GBP/CAD | 1.6240 |
| GBP/SGD | 2.00723 |
| GBP/THB | 47.60 |
| GBP/HKD | 12.263 red-down; blue-up (snap shot) |
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker