Euro news:
Technically the euro has fallen for the third straight day against the US Dollar but these falls are happening in smaller increments as the markets become well versed in eurozone developments.
The Spanish banking bailout has been the most recent catalyst for market jitters but risk aversion will persist so long as the bailout package remains unstructured and EU ministers fumble about with a concrete plan for financial reform in the eurozone. Downward pressure still remains on the euro but forecasts are now starting to vary with some suggesting parity, others targeting $1.10 and others still looking at $1.18.
Returning to today’s events the euro appears to be holding up, Sterling is edging ahead but only just up at 0.06% and whilst the euro is down on the dollar it is maintaining the $1.23 level so far this morning.
Eurozone macroeconomic data is thin on the ground today but as of late figures have taken a back seat to EU finance minsters’ comments. Italy announced austerity measures to the tune of €24billion today but this will come in to effect in 2011-2012 so for the time being the markets will remain wary of any verbal promises.
Pound news:
The pound is little changed against both the euro and the dollar as yesterdays GDP figure came in bang in line with market expectations which had no effect on the currency market. Ignoring an overnight high of $1.4446, the current GBP/USD is pretty much exactly where we left it at 16:30 yesterday.
There is no macroeconomic data to speak of for the British economy and so, shock announcements aside, Sterling is very likely to remain in the $1.43 level for much of the day. There is the possibility for Sterling to creep into the $1.44 levels but as we have seen it has not had the momentum to remain there for very long.
It’s the same story against the euro as high €1.16 levels and low €1.17 levels are the order of the day. Current global events are known to all and so the current prices reflect market sentiment in FX. Any upside movements are likely to be limited as the current view is that Government fiscal tightening will weigh heavily on growth for the U.K.
US Dollar news:
The negative sentiment still remains, however, the markets have calmed down for the moment as yesterday’s trading as well as this morning revealed no great losses or gains for the major currencies. The problems in the eurozone are still weighing heavily on a global recovery and as such the dollar is continuing to climb, albeit slowly, against both the euro and Pound.
The euro is down half a percent this morning at $1.2284 having reached a level of $1.2278 at 16:30 yesterday. The Pound is also relatively unchanged with the current buy price at $1.4347 which is exact where it was when the equity markets shut in London yesterday. Both the euro and Sterling are very much range bound for the time being against the dollar.
The Canadian dollar is also having a tough time making gains on the US dollar, the Loonie down 0.44% so far at 0.9323 on the Greenback. The U.S dollar will have found some support from the consumer confidence index which came in better than expected.
Today provides further macroeconomic news, 13:30 London time is core durable goods orders which is a leading indicator for production. This is then followed at 15:00 by new homes sales which are viewed as highly relevant as the ripple effect of a house sale can be wide reaching in terms of economic activity.
