Pound news:
Yesterday saw Sterling take noticeable losses in the FX markets as it lost ground to both the euro and the dollar. This morning ees the Pound clawing back some of this lost ground but unfortunately the damage was done. Sterling dipped to €1.1743 and despite being up on the euro today has only managed to reach €1.1772. The Sterling fall was not as a result of poor data, rather it was euro strength and renewed confidence in the single currency that saw traders favour the euro. Furthermore, tomorrow is the release of the MPC Meeting Minutes and many traders and investors are holding off on placing big positions prior to any significant announcements. Unless we have an unexpected announcement GBP/EUR is likely to trade within the €1.17 level, the high and low of the day separated by 31pips so far.
Sterling U.S dollar was also much the same, Sterling moving away from the high of $1.5309 from the previous week. This move lower was also as a result of the euro being the currency of choice. Unfortunately prices fall much faster then they rise so Sterling may find it hard to press ahead with no real support behind it today. As it is $1.5290 is viewed as a respectable level for GBP/USD given the economic climate so we may see the price hold at this level throughout the day.
US Dollar news:
The dollar opens down this morning as traders are still unsure whether we are headed for a double dip recession. So far the downturn has been kept at bay resulting in dollar falls as investors still favour the riskier assets.
Yesterday saw Sterling take a slight tumble as it fell to $1.5228 at the close of play, however, this morning sees the Pound rallying back and testing the $1.53 levels; $1.5290 the price on the market.
The euro had a relatively quiet day, trading in the $1.29 levels for much of the day although $1.30 was breached but failed to hold there. This morning again sees a high of the day in $1.30 territory but the current price has slipped away from there as EUR/USD trades at 1.2974. The commodity lead currencies are all up on the U.S dollar, both Australian Dollar and New Zealand Dollar climbing over one percent for the day so far. The Canadian dollar is lagging behind somewhat but trading at $0.9519 and 0.44% up so far.
The Commodity lead currencies are seeing support on speculation that China is easing its tightening, China being one of Australia’s best customers for raw materials. Yesterday there was little news and today is not that much busier, 13:30 London time sees U.S building permits followed 30 minutes later by bank of Canada rate statement.
Euro news:
In afternoon trading yesterday the euro received a second wind and took full advantage to move higher on Sterling and maintain $1.2960 against the dollar. The euro advanced to €1.1743 yesterday having been up at €1.19 for the last two weeks.
Looking at market volumes, trading for GBP/EUR appears to be relatively calm this morning but if we were to pick out a trend it would seem that Sterling is starting to move lower and away from its highs of the day. Considering the MPC minutes are out tomorrow followed on Friday by the EU bank stress test this may be the calm before the storm for GBP/EUR. Any hawkish sentiment will hopefully drive Sterling higher but should the stability of EU banks look strong then the euro will have the upper hand come the end of the week.
The new-found confidence has seen the euro move around the $1.30 mark but has failed to push higher, “Confidence will take a hit if European economic growth begins to fade,” said Greg Gibbs, a currency strategist in Sydney. “It is hard to see confidence in European debt markets improving further from here. Perhaps the stress tests will deliver one more spurt of confidence. But it is close to a peak and so is the euro.”
Quote of the Day
“One should always play fairly when one has the winning cards.” – Oscar Wilde
