Pound news:
After a very promising two days of trading for Sterling, corrections in the market place are starting to occur as the Pound moves back down to lower levels that have been regularly visited in the past. Having stormed off to a high of €1.2385 Sterling has edged lower to currently trade at €1.2158 and – 0.41% down on the day.
Against the dollar Sterling has, rather disappointingly, dipped below $1.50 to trade around $1.4895-$1.4905. A key support level of $1.5025 was breached putting further downward pressure on the Pound as traders bet on a move below $1.50. Sterling has just edged over $1.49 but a look at the highs and lows of the day show a one cent move so far suggesting trading could move between quite wide ranges today. The move lower is not based on any particularly damaging economic data but comments from a BoE policy maker hurt Sterling after he announced the economy may fall back into a recession. Despite the slight move lower a look back shows the euro has lost more than 7.5 percent so far this year against the Pound.
Yesterdays housing data came in softer than expected which was disappointing but not catastrophic. Manufacturing PMI out at 09:30 has come out bang in line with market expectation so we are not likely to see huge GBP movements off the back of this data.
The Australian dollar is taking heavy losses on the pound at Sterling marches on to AUD$ 1.7794 having hit a high of AUD$1.7932.
US Dollar news:
As a number of concerns enter the market place and shares take a tumble the dollar has climbed against the majority of its traded pairs as investors weigh up the likely hood of losses on riskier assets should we enter a double dip recession. As a result the dollar has climbed significantly against Sterling, taking the price way below $1.50 to trade at $1.4891.
The same situations has occurred against the euro, the single currency taking losses overnight as sovereign debt worries continue. However, the euro has managed to hold its own within the $1.2245 level as EU banks were not as reliant on ECB lending facilities as first thought. As is to be expected on negative sentiment for the market place the commodity currencies are suffering in the market place.
The Canadian dollar is at its weakest level for several months, not helped by weaker than expected GDP figures. The Loonie currently trading at $0.9378 and down -0.24% for the day so far. U.S data out today might have the potential to push CAD lower. 13:30 London time sees U.S unemployment claims, 15:00 Manufacturing PMI and Pending home sales, all key markers on the health of the U.S economy.
The Japanese Yen is trading up against the dollar as it is seen as the key safe haven currency as Japan does not have to rely on overseas lender due to their trade surplus.
Euro news:
The euro is still under pressure as sovereign debt worries continue but the single currency would have received some breathing room after the ECB 3-month lending facility was not as heavily required by the banks as first thought. This means EU banks have managed to sure up their balance sheets and are not as undercapitalised as first thought. This is definitely a welcome relief for the EU finance ministers as many of the banks are heavily exposed to EU sovereign debt. Furthermore, it has become common knowledge that the central banks do not have the funds for a second round of banking bailouts even if we ignore the bailout funds set aside for Greece.
For the moment the euro has been given the benefit of doubt as it moves 0.50% up on the dollar at $1.2295 and starting to test the $1.23 level. Spain’s sovereign rating is under pressure but according to
Moody’s the review will conclude within a three month period, however if Moody’s take a dim view on Spain’s finances then their AAA rating could be cut by up to two grades.
Quote of the Day
“Never let yesterday use up today.” – Richard H. Nelson
