Pound news:
$1.60 would have been a great price to see on the markets for GBP/USD but unfortunately Sterling has not quite had the momentum to hit that level. Nevertheless, the Pound has held $1.5930 but trading so far has revealed little insight as to what direct GBP/USD is heading, the percentage change on the day is currently -0.10%.
The start of the week was fairly quiet on the news front but today sees a little more information as the Halifax House Price Index and Services PMI are due to be announced. So far so good as the HPI has come in up 0.6% when the pessimistic market was looking for -0.4%. Services PMI is due at 09:30 and a positive number there could support Sterling or perhaps see a push higher against USD and EUR. Speaking of which, trading against the euro has been within tight ranges thus far, Sterling has managed to hold the €1.20 level but for the time being it appears to be trading between €1.2040 and €1.2080. Given the prolonged period Sterling traded at €1.19, €1.20 is a step in the right direction given the impending austerity measures that are about to come into effect in the U.K.
Against the Australian Dollar trading is not lighting up the screens but recent moves have taken Sterling back into $1.7460 with the high of the day coming in at $1.7505. Generally speaking Sterling starts today mixed against its major traded pairs with no move coming in at greater than 0.14% to the positive or negative.
US Dollar news:
At the mid week point the dollar appears little changed from yesterday as the markets are, for the time being, making their decisions on the possible threat of a double dip. Trading volumes this morning are looking very thin as percentage changes for the day remain within + or – 0.20%. Yesterday Sterling finished at $1.5936 and the current price on the market of $1.5933 shows that the price barely moved overnight.
There was a little more movement in EUR/USD but this equates to 29pips as the dollar regained some lost ground on the euro. For the time being though the single currency remains above $1.32. Yesterday was a poor day for the U.S economy as a whole raft of data came in worse than expected, the worst offender was pending
home sales that fell by 2.6% when the market was looking for a 0.5% increase. The data did not send the dollar crashing lower but nevertheless this recent information would have piled on the pressure on the Greenback. The concern now is that The Federal Reserve will have to re-introduce monetary easing, in other words rates will remain low for a long time. “If the Fed does signal more easing, a move (of the euro) toward $1.35 cannot be ruled out, but I wouldn’t be willing to go that far yet,” said Geoffrey Yu, currency strategist at UBS in London.
The commodity lead currencies are trading flat on the day but falls in the Asian markets overnight will not have helped the Australian Dollar, AUD and NZD are closely linked to how the Asian markets perform in terms of risk sentiment.
Euro news:
The confidence in the euro zone remains on the positive side of things but euro strength against the dollar is being maintained by the focus on the U.S economy, namely the double dip threat. The euro has just started to tick lower on USD, a brief look at the market shows the euro has dipped to $1.3186.
Greece has been the centre of attention in the financial world but the social unrest as a result of budget cuts has now come to the attention as certain extremist groups are advocating violence in the face of government action. A tiny spark is all that is needed to ignite the sovereign debt problems that seriously wobbled the euro zone last time round. Whilst things remain calm the euro is still looking stronger than many had predicted at this stage. Moves lower are still forecast but for the time being a clear direction has yet to come forth. I suspect that the ability to accurately predict a move lower has been hampered by the tourist season in club med and the beneficial impact this has had on the PIIGS economies.
Quote of the Day
“We are what we repeatedly do. Excellence, therefore, is not an act but a habit.” Aristotle
