US Dollar news:
Friday was a significant day for the U.S as non-farm payroll data was disappointing. The markets are now taking quite a negative view on things and are now expecting more quantitative easing from the Federal Reserve. This comes in stark contrast to speculation a couple of months ago that rates were to rise in the near future. “The market is bracing itself for a downbeat Fed statement this week, something that is weighing on the dollar”, said Chris Turner, head of foreign exchange strategy at ING Financial Markets in London. “One of the big factors (in the dollar’s loss) is markets coming around to the view that instead of tightening policy, the Fed actually might have to ease policy,” he said. Over the weekend the euro has crept higher on the back of this negative dollar sentiment moving to $1.3290 having finished at $1.3265 at 16:30 Friday.
Sterling has not made any significant gains on the dollar but has managed to hold $1.5950 which is very close to where we left it on Friday. A high of the day shows $1.5994 which identifies $1.60 as the next resistance level for GBP/USD. So far we have not managed to get through $1.60 but should sentiment go against the US dollar then we may see this level breached.
Against the Canadian dollar trading is flat this morning as the pair trades either side of no change on the market. Having climbed to $0.9824 last week the Loonie has now slipped back to £0.9735.
Pound news:
Reaching just shy of $1.6 takes the Pound to a six month high against the dollar after the data showed twice as many jobs had been shed than expected. This data heavily favoured Sterling as the start to trading on Friday saw initial losses against the dollar after manufacturing data was weaker than expected. Prior to the U.S data the Pound had slipped to $1.5840 but this lost ground was regained by afternoon trading. Had manufacturing data come in hotter than forecast we may be seeing Sterling through $1.60 but as it stands we are still in the $1.5950 range and showing little change for today.
Trading against the euro has been tough for Sterling as improved sentiment for EUR/USD tends to send GBP/EUR lower. Whist trading appears to be thin this morning Sterling has dipped to €1.1995 which will come as a disappointment to most. The close on Friday suggested Sterling would hold the €1.20 level but such is the improved sentiment for the euro that the Pound has failed to prevent the slip lower. Again the high and low of the day reveals tight ranges so this dip lower is by no means a clear direction indicator for GBP/EUR.
There is no Sterling or euro news today so depending on how the markets feel we may see Sterling creep back to €1.20.
This morning Sterling is trading lower against the Australian dollar but the current price of AUD $1.7334 is in the middle of a trading range that has seen the pair trade between $1.72 and $1.74 of late.
Euro news:
Not that many would have predicted it but the euro now seems to be old news as the U.S dollar leads the way in making headlines. The fact that the U.S economy has produced a constant stream of disappointing data means the single currency has not only maintained $1.32 but now appears to be edging towards $1.33. A break of $1.33 will be quiet a significant move for the euro if it can hold above this level. As previously mentioned EUR/USD movements can dictate EUR/GBP movements and over the weekend this has been the case. Sterling under pressure out of the two, however, a quick look at the markets shows GBP has now inched back over €1.20, if no ground breaking news comes from either economy then we may see GBP/ EUR flip flop either side of €1.20.
The Swiss Franc is considered a safe haven currency and during times of euro zone woe the euro sank against CHF. In an about turn the euro has recovered some of this lost ground and trades up 0.20% on the day as risk is on for the markets this week, but as we have come to expect this is subject to change at any time.
Quote of the Day
“We only do well the things we like doing.” – Colette
