US Dollar:
The Greenback edges higher this morning as the main driving force in GBP/USD and EUR/USD is the poor economic news flowing out of the Euro Zone and the negative sentiment surrounding the state of British finances. With little news coming out of the US of great economic significance or surprise much of the Dollar movements have occurred in relation to commodity prices. A slightly stronger Dollar saw oil futures trade lower, however, we may see the Dollar fall slightly by the end of the week as investors buy oil upon optimism about improved global demand and manufacturing output.
Papandreou will meet with President Barack Obama at the White House Tuesday, followed by talks with Treasury Secretary Timothy Geithner. The outcome of the talks will not have a great effect on the Dollar however a positive outcome may see the Euro edge higher as risk aversion decreases.
Pound:
Sterling’s minor falls seen yesterday afternoon have continued in early morning trading as UK data out overnight pointed to further weakness in the economy. According to RICS (Royal Institute of Chartered Surveyors) house prices grew at their slowest pace since August, putting further pressure on the pound. This came after yesterday’s report by Moody’s investors service highlighting that the UK faces a difficult balancing act between reducing support for the banks and resolving the growing public deficit.
In more positive news retail sales rose in February correcting a bad start to the year when we had all that snow in Jan that kept would be shoppers at home trying to keep warm. The figure showing sales rose at an annual rate of 2.2% in February fell short of raising hopes for an impending recovery on the high street as consumer spending remains on the cautious side. This caution was echoed by Kate Barker in her last MPC member speech yesterday confirming economic recovery is “broadly on track” but the road ahead is likely to be “bumpy”, excuse me for asking but is there a parrot in the room?
Finally if all my bearish news on sterling is getting annoying (and i don’t blame you) how about spending some free time doing volunteering (interesting and rewarding). Take a look at this website I found at the weekend — www.do-it.org.uk I will keep you posted on my progress…
Euro:
The Euro is unchanged overnight as Sterling and Yen news dominates the headlines this morning. The lack of major macroeconomic news has seen the Euro trading between tight ranges, as a result the Euro has edged higher against the Pound but is slightly down against the Dollar in light trading.
Traders are waiting for more solid news on the fate of the Euro, positive comments from France and Germany helped the Euro edge higher, however, they remain just that; positive comments. No financial aid has been offered whatsoever by either country and words will only go so far in repairing the huge budget deficit.
Again mixed views muddy the waters, George Soros made the statement that the Euro may not survive the crisis, yet the ECB commented yesterday that there is little danger of a domino effect happening with Spain and Portugal. As of this morning rumours are floating around suggesting a downgrading of Portugal by ratings agency Fitch.
A lack of data today will most likely see the Euro hit to-be-expected highs and lows of the day. For the spread betters amongst you, now is the time to establish your support and resistance lines.
Quote of the Day
“The only real mistake is the one from which we learn nothing.” – John Powell
