US Dollar news:
The U.S dollar is still very much on the back foot versus the Pound but euro gains are now being paired back as we end the week. Against Sterling the dollar has now slipped to $1.5617 on the market with the high of the day coming in at $1.5655. The dollar has started to pair some of those losses, perhaps as a pre-emptive move ahead of US GDP out today. Yesterday saw the euro hit 1.31 but this multi month high was short lived as the single currency failed to hold at that level.
Looking back at the week we can see that the dollar has moved lower against the single currency, the start of the week showed EUR/USD $1.29 levels whereas we end the week currently at $1.3051. The markets have not looked too favourably on the U.S economy recently and this week has seen the dollar suffer as a result. The threat of a global slowdown has capped the commodity currency against the dollar, the Canadian dollar remains in the mid $0.96 region and Australian Dollar and New Zealand Dollar remain relatively unchanged. The dollar may start to pick up as concerns over a slowdown in global growth will support the Greenback as investors move back to a risk off stance. Yesterday’s data was bang in line with market expectations which is not necessarily a bad thing but better than expected data is what’s needed to reverse current dollar losses.
Pound news:
Thursday was the only day that Sterling ventured out of €1.19 this week, and even then it just managed to hit 1.2008 but fell back immediately. On several occasions we have come close to getting through €1.20 but it would seem that this is proving a very significant resistance level. At the moment the price on the market is €1.1977 which is near the highs of the day for Sterling and 0.36% up on the euro but so far not showing signs of surging ahead.
Against the dollar we have climbed from $1.5492 on Monday to our current price above $1.56. We are heading into the weekend with U.S GDP expected which is obviously a major economic marker. No doubt this has the potential to move GBP/USD but seeing as it is Friday, normally a subdued trading day, traders are most likely to be waiting on the sidelines before deciding whether to buy or sell Sterling.
The Australian dollar has been a relatively volatile trading partner this week, AUD in general is very sensitive to global growth outlook and as such has risen to AUD $1.72 mid week but has subsequently fallen to $1.7404 today as China reports manufacturing slowed for a third month. The outlook for Sterling is still uncertain as BoE Governor Mervyn King has made it clear that we are far from economic stability. There is no market data for release today so Sterling is at the whim of events elsewhere.
Euro news:
The euro has surprised many by getting to $1.30 and has shocked even more by holding at this level then testing $1.31 towards the end of the week. Those who closely monitor the situation still maintain that the euro zone is fundamentally flawed but it would appear that the FX markets are acting on the short term; the short term favouring the single currency. The sovereign debt issues and bank liquidity concerns will eventually come back, the fact that we are no longer hearing about Greece & Co does not mean they have magically reduced their debt. The markets appear to be very fickle and move from one crisis to the next at great speed, the stress test came under heavy fire over its apparent leniency however this now appears to have been forgotten. Possible relapses into instability aside, the euro is looking strong. Movements against the dollar have been well documented and it has kept Sterling within tight ranges when many had hoped for at least €1.20 or €1.21.
Quote of the Day
“Freedom is not worth having if it does not include the freedom to make mistakes” – Mahatma Gandhi
