POUND NEWS
Sterling has lost some ground against the dollar as the markets now adjust to the thought of more Q.E from the Federal Reserve. The current price in the mid $1.58 range is some way off the $1.60 levels we saw last week but many traders have cited the dollar weakness as over done.
Trading for today sees Sterling drop by -0.77% on the market but whilst this is a pretty major move it is likely to be as a result of traders trimming their positions as they get to their desks. Against the euro trading is much more subdued, the live price is showing that the pair has moved only 0.05% so far. Sterling is looking firmer as we start the week, the Rightmove House Price Index delivered a 3.1% increase in house prices when the market was expecting a -1.1% decline. Current levels in the €1.1430 range are still disappointing but for the time being the Pound has moved off the lows of last week that saw GBP/EUR touch the low €1.13 area. A quick look at how Sterling is performing today reveals that the bias is on selling the Pound.
The big moves are against the Yen and the dollar but elsewhere Sterling has only dipped by -0.08% against the Australian dollar to trade at $1.6122 and -0.03% against the Canadian dollar to trade at $1.6156. The house price data has offered some support to Sterling this morning but generally speaking traders will not dwell on the improved figure as other macroeconomic factors take precedence in the FX markets. There is no more data due for the U.K today so any moves will be driven by investor sentiment.
EURO NEWS
The euro is trading slightly lower today but the moves appear to be confined to range trading rather than substantial trading swings. A move lower against the dollar was always inevitable as the price kept rising past trading forecasts. Last week saw the single currency surge past $1.4050 when many had thought it would be out of steam at the $1.38 level but as it stands the pair is now trading back at $1.3870 as many traders book their profits. Where the pair head from here will be interesting to watch, the view in the city would suggest that a repeat of $1.40 is not likely but at the same time there appears to be little incentive to sell the euro. The result of this is that we may see the pair trade within tight ranges before a clear direction becomes apparent.
Against the pound the euro has lost a little bit of ground from last week, the single currency had forced Sterling into the €1.13 range but the weekend has been kind to the Pound and as such the euro looks a little softer at €1.1440. As previously mentioned, trading looks to be pretty quiet for GBP/EUR which is likely to keep the pair in the mid €1.14 level. A look at the highs and lows of the day reveals that the Pound has tested €1.1490 so the euro might come under some pressure in afternoon trading if we look to re-test that level.
US DOLLAR NEWS
Over the weekend there were numerous comments from various central bankers, however, the message they were putting forward was not entirely co-ordinated and as such said comments have only served to further cloud the picture. The dollar is trading lower as the markets have now adjusted to the idea of the U.S printing more money and as such the dollar has pushed Sterling back down to a $1.5870 handle. The euro is also well off its highs of last week and trades at $1.3866. The move against the euro signals a three cent advance on the single currency as many traders will be looking to take profits from the recent dollar weakness.
All eyes now turn to the G-20 meeting as finance ministers look to discuss ways of dealing with this dollar weakness. Several countries are concerned over the recent dollar fall which has, in turn, pushed up many commodity prices to record highs. Many sort after commodities such as oil and gold are priced in dollars and as the dollar falls oil, and especially gold, becomes cheaper to buy relative the purchasers base currency. If this continues then we are likely to see a repeat of the oil price spike that saw one barrel hit $147 but more broadly speaking it leads the way for an asset bubble which could and probably will pop.
Elsewhere on the markets the dollar is trading higher against the Yen which will please the BoJ but current levels are still considered too high for the Japanese Government. The dollar is trading lower against the Canadian Dollar this morning but over the weekend it has moved two cents off parity to trade at $0.9804.
QUOTE OF THE DAY
“The grand essentials of happiness are: something to do, something to love, and something to hope for.” -Allan K. Chalmers
