Pound news:
Sterling has been very much range bound for the past week with the $1.4350 level maintained when taking out the highs and the lows of the day. Overnight Sterling recovered into the $1.4400 level but market open sees GBP/USD trading at $1.4387. For the moment Sterling appears to have caught some momentum trading up 0.22% on the day versus the Greenback which given the recent downside pressure GBP has experienced is a positive sign.
Sterling is also up against the euro but the picture is not quite as rosy as the upcoming EU meeting has pushed GBP/EUR lower to €1.1527 with a low of €1.1404 reached early this morning. Sterling is up 0.21% on the market right now but the current price of €1.1527 is not quite as appealing at the mid €1.16 levels we have witnessed recently.
Yesterdays retail sales were bang in line with expectations which did little to move the market, however 09:30 this morning sees public sector net borrowing figures. The market is looking for a deficit of £11.1 billion, anything better and Sterling should push ahead versus USD and EUR but a weak figure is likely to erase any Sterling gains this morning.
US Dollar news:
The dollar starts on the back foot somewhat this morning as both the euro and the Pound claw back some losses after an upcoming EU meeting improved market sentiment on the euro debt crisis. The immediate effect of this saw the euro advanced to $1.2588 as of 7:03 a.m. in London from $1.2487 in New York yesterday, after earlier rising to $1.2672, the strongest since May 13.
Sterling has also rallied slightly to start the day up 0.08% at $1.4375. Yesterday was the all important U.S unemployment claims figure, this came in weaker than expected at 471,000 versus 439,000. In ordinary market conditions this would have lead to dollar weakness however the figure was overshadowed by eurozone figures and as such no great dollar slide ever materialised.
No U.S dollar news today so the Greenback may find itself taking losses if sentiment surrounding the euro remains upbeat. However, as we have seen things can change very quickly.
News on the EU meeting has certainly given the EUR/USD a boost but the global outlook still remains very negative and as such commodity lead currencies are still losing ground. The Canadian dollar now trading at $0.9368 versus the U.S dollar with parity being a distant memory.
Euro news:
The big news of the day for the euro is the EU meeting taking place specifically to discuss the regions debt crisis. It will be interesting to see what they come up with as recent efforts to control the eurozone have all but failed with the market remaining negative about both the $1 trillion rescue package and the recent ban on short selling. If nothing substantial comes from this meeting then investors will move out of eurozone assets very quickly. “There’s a threat they’ll do something more decisive,” Marc Chandler, New York-based global head of currency strategy at Brown Brothers Harriman & Co., said in a Bloomberg Television interview. “I would conceive a situation where they need to break this one-way market in the euro.”
Against the dollar the euro has moved away from the lows of the week, currently trading at $1.2487 with a high of the day being $1.2671. As we can see volatility remains very much affiliated with EUR/USD pair and is likely to continue for the midterm until a definitive decision is reached on the eurozone.
The euro received a boost recently after news circulated that the ECB may step in to support the euro. This will be interesting to watch as euro losses need to be watched yet a weak euro is a huge boost the region in terms of upping exports. There is a very fine line in getting the decision right on how to deal with the euro, the wrong decision likely to cause untold amounts of damage.
Quote of the Day
“Courage is the power to let go of the familiar.” – Raymond Linquist
