US Dollar:
There still seems to be a lack of confidence amongst investors following the disappointing data over recent weeks. Directionless trading in the days ahead is likely, as markets suffer from low holiday volumes and few economic data releases. This uncertainty is weighing on the currency markets and leading players back into the usual safe haven’s of the dollar and yen. US markets fell yesterday to push players back into the dollar, with cable continuing its decline from last week. The dollar has now taken over a cent and a half off the pound to push cable under the $1.54 level. We have also seen the dollar take further gains off the single currency, with EUR/USD homing in on the $1.26 level.
Data 15.00: Existing Home Sales 4.68m from 5.37m
Pound:
Sterling faired well against the euro and dollar yesterday, with another surge higher against the single currency and taking a breather against the greenback after cable took a hit last week. We saw GBP/EUR home in on the 1.23 level as the single currency was sold across the board, falling just short to trade around the 1.2270 mark. Against the dollar, and a run for safe haven currencies, the pound seemed to be holding its own, but as US markets closed down, the pound was sold off in Asian trade and has kept going this morning. GBP/ USD was lower as weak Japanese shares weighed on investors views on global economic outlook. Also, risk appetite came under pressure as the news spread on a UK newspaper article from the Times quoted a leading policymaker at the BoE as saying that the UK faces a “significant” risk of a renewed slide into recession. “It would be foolish to rule out the possibility of a double dip recession, even if it wasn’t the Banks central predic¬tion, said Dr Martin Weale, the newest member of the Monetary Policy Committee, according to the Times. He also feared that the Banks central outlook—which is for growth of about 2.8% in 2011 and 3.2% in 2012—could be too optimistic. All negative for the pound. Data 09.30: BBA Mortgage Approvals 35.3k from 34.8k.
Euro:
The euro made back gains against the pound in overnight trade and has pushed higher this morning as a correction in EUR/GBP took hold, combined with talk of a UK recession by a BoE policymaker. It was a mixed day however for the single currency as risk aversion gripped the markets and safe haven currencies such as the greenback and yen rallied on the euro. With trading flows thin due to late summer holidays, investors are guarded. The cautious mood weighed heavily on the euro, which hit a near two-month low against the yen and five week low against the dollar. The euro is most vulnerable to a slowdown. The southern European countries that are going through all these somersaults trying to get their deficits down, won’t get the tax revenues they were expecting. Data 10.00: E/Zone Industrial New Orders m/m 1.6% from 3.8%. 14.00: Belgium NBB Business Climate –6.1 from –6.5. Data already out: German Final GDP came in at 2.2% as expected.
General:
• Major currencies are lower against the yen, despite a warning from Japan’s officials about the strength of the country’s currency. Japan’s chief cabinet secretary said Tuesday that the government remains on high alert against recent movement in the currency and share markets. The Nikkei has now fallen under the 9,000.00 mark.
• The Swiss franc has hit a record high against the euro as concerns over global growth boosted the Swiss currency.
For more information or to request a call back click here
| GBP/USD | 1.5380 |
| GBP/EUR | 1.2205 |
| EUR/USD | 1.2614 |
| GBP/JPY | 130.28 |
| GBP/AUD | 1.7989 |
| GBP/NZD | 2.1904 |
| GBP/ZAR | 11.3856 |
| GBP/CHF | 1.6044 |
| GBP/CAD | 1.6281 |
| GBP/SGD | 2.0971 |
| GBP/THB | 48.52 |
| GBP/HKD | 11.9627 red-down; blue-up (snap shot) |
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker