Pound news:
Having started the week at $1.4491 the climb to $1.4705 over the last 5 days has come as welcome relief for those buying the dollar selling Sterling. Unfortunately these levels are not so attractive considering recent past prices. The rally has come off the back of an initial over sell-off midweek and as a result the Pound may start to run out of momentum as we head into the weekend. The Pound could find support in the economic data that is due at 09:30 this morning. Manufacturing Production, Producer Price Index and Consumer Inflation Expectations are all significant markers of economic health and any improvements here could push Sterling higher.
Against the euro the Pound seems to have found a comfortable level for the time being as we have been in and around the low €1.21 area for the entire week, €1.22 looking slightly ambitious for now, especially given the slightly upbeat news emanating from the eurozone. As was to be expected the rates remained unchanged with all the focus now shifting to the emergency budget. Overall the Pound ends the week having traded higher against both the euro and dollar, notable gains coming from GBP/USD.
US Dollar news:
Trading this morning appears to be on the calmer side of things, whether this transpires to be the calm before the storm like last week we will have to wait and see. Going into Friday’s trading session the dollar has lost some ground to both the euro and Sterling as comments yesterday have greatly improved market sentiment. Whilst only ahead by 0.04% the euro is trading at $1.2115 having hit a high of the week at $1.2148. “The panic scenario has been eliminated for now and the euro may grind higher,” said Phil Burke, chief dealer for foreign-exchange trading in Sydney at JPMorgan Chase & Co., the second-largest U.S. bank. “There should be a slightly bullish bias short term.” Sterling is flat versus the dollar so far today but having closed at $1.4670 16:30 London time yesterday it has appreciated in Asian trading to start the day at $1.4708. The high of the day, $1.4757, is some way off the $1.48 level but hopefully this GBP rally will hold in the $1.47 levels over the weekend.
Against the commodity lead currencies the dollar is up but not making any spectacular gains. The Canadian dollar is at $0.9668, down 0.39% for the day so far but trading within ranges for the time being. The macro data for the U.S was pretty much in line with expectations, unemployment claims up by 9000 but the trade balance down from -$40.8billion to -$40.3billion. Retail sales at 13:30 London time and consumer sentiment at 14:55 are the next data figures to watch out for.
Euro news:
Yesterday I mentioned that the ongoing legal dispute regarding German aid should not be forgotten. Well, mid afternoon it was announced that the German courts had thrown out the case thus allowing the German government to provide its share of the bailout package. The immediate effect of this was a euro rally against the dollar as the euro pushed through $1.20 then $1.21. By 16:30 London time the rally had subsided and the euro seemed to have settled at €1.2092. Today it picked up the momentum again to trade into the mid $1.21 level but has subsequently moved away to now trade session lows at $1.2094. “I’m not sure how tangible this rally will prove….When it’s built on the absence of news rather than news it can be a little more fragile” said Daragh Maher, deputy head of global foreign exchange strategy at Credit Agricole CIB in London.
Market rumours, which have not been verified, suggest that Spain is on the verge of a Greek style tragedy. Nothing has been confirmed but the rumour refers to a possible large corporate bankruptcy. The city is very fond of market rumours, especially those who have placed large bets on the collapse of the euro.
Heading into the weekend, this week has ended on a better note as a review of EUR/USD performance shows a climb from $1.1977 to $1.2100.
Quote of the Day
“The best way to predict your future is to create it.” – Anon.
