US Dollar:
U.S. dollar price action was mixed during the European trade on Tuesday with the main driver of price action being the Chinese intervention in the currency market reminding investors that the loosening of the currency peg announced on the weekend is not the green light that global investors were looking for. Figures focused mainly on the US housing market with the NAR existing home sales data for May unexpectedly con¬tracted 2.2 percent in May. Today's main release will be the FOMC rate decision that holds the greater potential. No change in the Fed Funds rate is expected; but the group could very well update growth and inflation expec¬tations. What’s more, there is a good chance that commentary could shift or extraordinary policy efforts could be altered. If that is the case, it could be seen as step towards tightening.
DATA USD New Homes sales (MAY) FOMC Rate Decision (JUN)
Pound:
Expectations were running high yesterday morning as the most eagerly anticipated budget in living memory was released. Sterling had moved very little in the weeks preceding the announcement and Fitch’s warning last week that the government had to do more to preserve the nation’s top sovereign credit rating fur-ther focused the market’s attention. However, the reaction was relatively subdued. At London open, GBPUSD dropped to touch 1.47 and GBPEUR touched a 3 week low of 1.1940. Once the Chancellor began speaking though, GBP began a steady climb to mid 1.48’s against the USD and well above 1.2050 by London close. The budget its self was certainly tough while protecting lower income brackets and pensioners but the VAT increase to 20% will certainly effect everyone. The release was well received by the city and David Riley, the head of sovereign ratings at Fitch, said: “Our preliminary assessment of today’s Budget is that it sets out an ambitious deficit reduction path that, if delivered upon, will materially strengthen confidence in UK public finances and its AAA status.” Today's focus will be on the BOE minutes from the last meeting. As we know, the MPC made no change to the base rate or QE but today's release will be closely watched for clues to future direction.
DATA BOE minutes (JUN) BBA Loans Home Purchases (MAY)
Euro: Risk aversion would cause the euro would lose ground yesterday as a drop in optimism caused bearish momentum to resume along with updates that undermined the perception that the region could support a finan¬cial recovery. Top news was China intervened to weaken the Yuan, sending a clear signal to investors that the country's shift to currency flexibility is a two-way street, this caused oil prices and risky assets across the board to tumbled. Compounding the EuroZone problems was ECB Noyer’s comment that private European banks were encountering funding problems and the timely downgrade for BNP. Further depressing confidence, Stan¬dard & Poor’s warned that more Spanish real-estate developers were likely to fail, leading to a greater overall level of defaults and higher lending cost. Data today includes German PMI with figures expected to show that manufacturing and service sector expansion slowed for the second consecutive month in June. The same is on tap for the Euro Zone as a whole, with a composite region-wide PMI sliding to the lowest in four months.
DATA FRA PMI (JUN), GER PMI (JUN), EUR PMI (JUN)
General:
Japan has decided to expand its credit line to Greece to 200 billion yen to help stabilize the global economy and avert market turmoil, ahead of the Group of 20 meeting slated for this weekend.
Japan will provide the aid via the International Monetary Fund over three years through 2012.
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| GBP/USD | 1.4870 |
| GBP/EUR | 1.2101 |
| EUR/USD | 1.2268 |
| GBP/JPY | 134.38 |
| GBP/AUD | 1.7087 |
| GBP/NZD | 2.1033 |
| GBP/ZAR | 11.2633 |
| GBP/CHF | 1.6448 |
| GBP/CAD | 1.5330 |
| GBP/SGD | 2.06069 |
| GBP/THB | 47.86 |
| GBP/HKD | 11.56 red-down; blue-up (snap shot) |
These rates are for indication purposes
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker
\n john.georgiou@voltrexfx.com