Pound news:
Sterling got off to a slow start this morning as the market waited for retail sales figures. These figures came bang in line with market expectation at up 0.3%. As a result Sterling is trading in calm waters for the moment, slightly down on the euro at €1.1583. The situation with British finances are well known to most and so Sterling is being pushed and pulled by events elsewhere, namely the eurozone.
As the outlook improved for the euro yesterday we saw Sterling rally to above $1.44 but so far the Pound has come down from there, trading at $1.4362 currently. Against the euro Sterling is holding in the high €1.1580 level in what seems a fair price for GBP/EUR given the highs and lows of the year so far. With the retail data providing no direction for the pound today Sterling will be trading off risk sentiment.
As it stands the market is very much risk adverse so the outlook remains negative for Sterling. Yesterdays comments from BoE policy meeting held earlier in the month reaffirmed speculation that rates would remain low for many months to come, this will keep any Sterling gains to a minimum. Next month is the emergency budget meeting at which point a better idea of how the U.K will handle its deficit should be forthcoming. Until then Sterling will remain under pressure and very much at the whim of market sentiment driven by eurozone events.
US Dollar news:
Yesterday’s data was not quite up to market expectations as the Consumer Price Index came in slightly weaker than expected. This had very little impact on USD/EUR in what was a very volatile trading session. The ban on short selling by Germany saw the euro plummet to $1.2144 however at 13:00 the euro jumped almost a cent and carried on rallying to a high of $1.2430. Overnight these gains were pared back but the euro starts on the front foot currently trading at $1.2414. USD losses are a result of changes in risk appetite, this time losing out when rumours circulated that the ECB may step in to support the euro.
Sterling was also subject to a rollercoaster in the FX markets as the Pound hit a low of $1.4238 but rallied back in trading in New York and Asia to hit a high of $1.4466 as the Asian markets got into full swing. This morning Sterling is creeping up having just edged into $1.4401.
The Canadian dollar suffered against the U.S dollar as the threat of a global slowdown saw investors move away from commodity lead currencies. The Loonie continues on the back foot down 0.70% at $0.9507.
13:30 London time sees the unemployment claims number, a very important marker of economic health in the U.S. with the market looking for 439,000 claims.
Lawson Says Germanys Short-Selling Ban Cant Last Long
Euro news:
The euro was subject to very volatile trading yesterday as one announcement contradicted the next. The euro took a momentary dive as rumours spread that Greece was planning to leave the single currency. This was followed by a rally as the rumour was quashed by the Greek finance minister. This was then followed by possible speculation that the ECB will support the euro in order to stem losses, mainly against the dollar. As this did the rounds in the city the euro surged ahead hitting $1.2444 during London trading hours.
Today’s trading sees the euro come away from the £1.24 level to settle for the moment at $1.2382. The outlook for EUR/USD will be interesting to watch as a weak euro benefits exports in the eurozone. Charles Wyplosz, head of the International Centre for Monetary and Banking Studies in Geneva says “The euro depreciation is very good news for the region because the rest of the world economy is expanding, this is going to bring a welcome boost that may save the euro zone from outright recession.”
Quote of the Day
“To avoid criticism, do nothing, say nothing, and be nothing.” – Elbert Hubbard
