Currency News

Investor concerns over Greece stabilising

Toby — Mon, 21 May 2012 10:01:04 +0000

POUND
Sterling’s rally against the euro has run out of steam leaving the UK domestic currency at a two week low and also remaining lower against the USD. Sterling has benefitted in recent weeks as investors become increasingly concerned about political turmoil in Greece and the fragility of the Spanish banking sector but this safe haven buying of sterling has been dented by a less optimistic quarterly inflation report last week, which left the door open for more QE. It is also important to remember that the BoE’s primary motive is to restore growth rather than strengthen sterling so that means controlling the strength of the pound in order to maintain export competitiveness.

EURO
The Euro is stronger against the pound this morning but is down slightly against the USD as investor concern around the Greek political situation has subsided. The single currency received a boost over the weekend with world leaders expressing their support for the Euro at the G8 summit. Recent gains may well be short lived though as uncertainties remains around Greece and the impact this may have on the other member states. Attention will be given to Thursday’s French and German flash services and Manufacturing PMI’s from the two biggest economies in Europe providing further clues on the current economic situation in the member state.

US DOLLAR
The USD is maintaining it’s strength against the riskier pound and USD as we entering a new week in the FX markets. There has been some stability over Greece which has prevented any majors gains for the US currency as traders pay particular attention to several potentially significant US economic indicators. Existing and new home sales figures are scheduled for Tuesday and Wednesday, respectively, and are forecasted to show growth in the US real estate sector, a key area for the US economy.

Concerns over Spanish banks

Toby — Fri, 18 May 2012 09:45:23 +0000

POUND
Sterling is trading in the lower end of 1.24 against the euro today and has fallen into 1.57 against the USD as the foreign exchange markets continue to trade with high volatility and investors provide less support to the pound after the Bank of England cut it’s growth forecasts and European economic problems continue. The inflation report delivered by Mervyn King painted a more negative outlook for the UK economy leaving the door open for more quantitative easing which could see further weakness particularly against the USD and cap recent gains vs. the euro.

EURO
The Euro has managed to put a lid on sterling gains in the last few days helped by weaker UK economic news. The single currency does however remain low vs. the USD. The news is all very negative around Europe at the moment with continued concern over Greece and the fragility of the banking sector in Spain, as Bankia amongst others have their ratings cut along side rising borrowing costs at a bond auction yesterday. Euro zone fundamentals remain extremely poor and any additional negative announcements today especially around Greece could lead to further losses against the USD.

US DOLLAR
The USD tumbled against some of the other safe haven currencies like the JPY yesterday but remains strong against the riskier pound and euro today despite worse than expected Philly Fed Manufacturing Index. The index came out way below forecasts at –5.8 against a forecast of 10.3. Today is a quiet one for economic data across the board so the market will be giving extra attention to announcements out of the euro-zone, especially with regard to the indebted countries like Italy, Greece and Spain.

Sterling falls to one month USD low

Toby — Thu, 17 May 2012 11:04:00 +0000

POUND
Sterling is trading marginally down against the euro today and has dropped even further against the USD after the Bank of England reduced growth forecasts in yesterday’s quarterly inflation report. The pound is continuing to come under pressure against the USD as investors flee risk in search of the safe haven, global currency. Expectations are now increasing once again for the Bank of England to turn on the printing presses by mid summer on the back of economic turmoil in Europe which in turns is likely to see a lower trading sterling.

EURO
The Euro is down for another day against the USD falling as low as 1.2690 while making a small number of gains against a shaky looking pound. There are very real concerns about Greece ditching the Euro which has boasted demand for the US currency as investors look to avoid risk for the time being. Greece will face another election on 17th June which could see a party elected that is opposed to all the major austerity cuts going on and the ECB has blocked the flow of money in to some of the Greek banks due to them being undercapitalised. The Euro crisis continues

US DOLLAR
The USD is having a great time amongst all the financial chaos in European with investors flocking to buy the currency, ditching the Euro on risk and the pound on reduced UK growth prospects. Today will see investors focus on the US unemployment claims figure followed by manufacturing data at 2pm.. The labour market has lacked any significant growth in recent months but the number of people claiming unemployment insurance remains steady so any positive news today could lift the USD higher.

Euro crisis leaves QE door open

Toby — Wed, 16 May 2012 08:33:16 +0000

POUND
Sterling is continuing to take advantage of a weaker euro this morning reaching 1.2577 but has lost out against the USD as political instability in Greece has driven investors to the safety of the USD. Mervyn King the governor of the Bank of England is due to deliver the quarterly inflation report this morning which includes a two year growth forecast, likely to be lower since the Euro crisis has intensified. King is seen as leaving the door wide open for further monetary easing with a downturn in Europe likely to hit the UK significantly, especially if conditions worsen. In terms of the value of sterling I think we have more room to go against the Euro but increased risk aversion could see further falls against the USD.

EURO
The Euro is quite clearly struggling at the moment, falling to 1.27 against the USD and the high end of 1.25 against the pound. Greek political leaders will meet today in order to form a caretaker government to take the country to a second election. Greece’s euro membership is at stake and there is deep concern amongst the population which could lead to panic at the country’s banks. Some economists have calculated that 70% could be wiped off the value of any deposit, if the country returns to the drachma.

US DOLLAR
The USD is the only winner at the moment amongst all the uncertainty in Europe, with sizeable gains being made against the pound and euro also helped by a better than expected US Empire state manufacturing index. Investors today will be monitoring several bits of data from the US including the building permits figure and the FOMC meeting minutes. If the building permits number comes in strong the greenback may well rally further although this will also be heavily influenced by the result of the FOMC minutes on whether they will conduct further monetary easing.

Sterling falls from 1.2554 high verses. Euro

Toby — Tue, 15 May 2012 12:41:52 +0000

POUND
Sterling has fallen by 0.5% against the euro and over 0.25% vs. the USD as we head towards afternoon trading. Stronger growth data from Germany has supported the single currency in contrast to the UK trade balance number which was slightly wider than the –8.4B forecast at –8.6B showing no change from last month. Movements in the GBP/EUR rate are likely to be dominated by events in Europe and Greece in particular which could see the bailout plan scrapped.

EURO
The Euro is rallying against the pound and by a smaller degree vs. the USD after better-than-expected German growth data which was much stronger than the 0.1% forecast at 0.5%. The single currency is however by no means out of the woods and analysts expect further pressure from the Greek political crisis which may result in the bailout plan (which took months to orchestrate) being scrapped and the country being forced to exit the euro zone.

US DOLLAR
The USD has made strong gains vs. the pound but has lost a little strength against the Euro which benefitted from stronger economic data. The USD benefitted from risk aversion yesterday over investor concerns surrounding the political situation in Greece. Turning to today traders will be paying particular attention the results from the US on retail sales and core retail sales which if lower than forecast may create some weakness.

Greek issues weaken Euro

Toby — Mon, 14 May 2012 09:37:08 +0000

POUND
Sterling has reached a high of 1.2490 against the euro this morning but has fallen slightly against the USD back into 1.60, a three week low. The UK currency has been particularly strong against the single currency in recent weeks aided by it’s safe haven status as investors continue to support the UK government’s austerity measures. The Bank of England seem more optimistic about growth in the UK economy but remain concerned with inflationary pressures which no doubt will be highlighted by Mervyn King when he delivers the quarterly inflation report on Wednesday.

EURO
The Euro has fallen by nearly 0.4% against the pound and USD this morning as political turmoil in Greece undermines the single currency further. Greek political leaders plan to form a coalition government last week looked unlikely although one conservative leader Antonis Samaras stated there was still a chance a second election could be avoided. Overall sentiment for Greece points to increased prospects of an exit from the euro-zone which is likely to lead to high volatility in the FX markets this week and continued focus on the region.

US DOLLAR
The USD is stronger against the riskier euro and pound this morning helped by consumer confidence reaching a four year high as well as benefitting from risk aversion with JPMorgan the US biggest bank by assets reporting a $2 billion loss. Key US economic data is likely to provide interest this week especially with the release of retail sales and core retail sales tomorrow. The market will also pay close attention to Wednesday’s FOMC meeting minutes which could provide investors with clues as to any steps the Fed is considering in order to boost the economic recovery.

Nationwide consumer confidence lower

Toby — Fri, 11 May 2012 11:13:42 +0000

POUND
Sterling is holding it’s strength above 1.24 vs. the euro and 1.61 against the USD as positive news from the Bank of England maintained interest in the currency. Interest rates and QE were both kept on hold yesterday afternoon which helped alleviate concerns that the central bank may well change it’s direction and pump more money in to the economy through it’s quantitative easing campaign. Recent weaker data for the UK from purchasing managers figures and GDP which put the UK back in a recession had prompted some investors to forecast more QE. The BoE is most concerned with recovery in the UK rather than how strong the pound is so whilst getting excited about the prospect of more sterling gains it is important the UK’s export market remains buoyant, growth in the euro zone and a cheap pound is a key part of this.

EURO
The euro remains weak against the USD and pound rather unsurprisingly with political deadlock in Greece fuelling interest in selling the common currency. These fresh concerns over political uncertainty in the region could trigger a default and the country’s exit from the euro zone is likely to undermine the single currency further particularly against the USD. Investors will continue to monitor developments in the euro-zone particularly in Greece with the potential for more losses before the end of the week.

US DOLLAR
The USD is maintaining small ranges against the euro and pound today as the spotlight remains firmly fixed on the mess in Europe. As the week draws to a close investors will want to pay particular attention to several indicators out of the US which may well generate some volatility in the market. US PPI is forecasted to be flat with any figure above expectations likely to lift the currency and later in the day traders will be focused on Preliminary UoM consumer sentiment data which if strong could provide additional strength to the greenback.

Concerns about political deadlock in Greece

Toby — Thu, 10 May 2012 10:20:43 +0000

POUND
Sterling is trading off a recent high of 1.2479 vs. the euro and has fallen to 1.61 against the USD. The market is trading the pound cautiously ahead of the Bank of England decision at midday with further gains a possibility if quantitative easing is left unchanged. Manufacturing production data out earlier this morning was stronger than the 0.5% forecast at 0.9% but industrial production was lower than originally forecast at –0.3%. Recent weaker economic data particularly from the retail and housing sector has raised speculation that the BoE may opt for more QE this year even if they hold today,,.

EURO
The Euro has regained a small amount of recent losses vs. the pound and remains weaker against the USD as concerns intensify over political deadlock in Greece resulting in the defaulting of it’s debt and possibly exiting the euro zone. This has kept the single currency under pressure from selling also creating a threat of debt contagion over other EU countries. In other news Spanish bond yields are continuing to rise above 6% and French Industrial Production fell more sharply to –.0.9% from –0.4% forecast.

US DOLLAR
The USD is continuing to maintain strength against the euro and pound with a lack of economic news in the US allowing the currency to take advantage of the drama going on in Europe following recent elections in France and Greek political uncertainty. Today investors will be paying attention to scheduled US economic data including the trade balance data and unemployment claims. There will also be close attention on Ben Bernanke’s speech at 2.30pm this afternoon with investors seeking clues on economic growth and future monetary policy.

Sterling reaches 3.5 year high vs. Euro

Toby — Wed, 09 May 2012 10:12:47 +0000

POUND
The pound is continuing to trade strongly against the euro this morning but is down by nearly one quarter of a percent vs. the USD. Overnight we saw sterling reach a 3 and half year high vs. the single currency and many analysts are expecting further gains while concerns grow over the region and austerity measures continue to be implemented here by the UK government. Investors focus is very much on the Euro zone at the moment which is enabling weaker UK data to have a smaller impact as shown by this morning’s retail sales which posted their largest fall in a year. The market will now be focused on the Bank of England decision tomorrow with the majority of economists expecting no change in QE or interest rates.

EURO
The euro remains weak against the pound and even weaker vs. the USD this morning as euro zone political and economic concerns encouraged investors to sell the currency. Political uncertainty in Greece and a French leadership change which may undermine austerity plans key in tackling the debt crisis has encouraged investors to buy the safer looking Great British pound. Tomorrow is another key day for economic releases with French industrial production, French government budget balance, Italian production and the ECB monthly bulletin all due.

US DOLLAR
The USD is trading stronger against the pound and euro this morning after taking advantage of poorer UK economic data and negative sentiment towards the euro zone. USD movements today are likely to be dictated by events outside of the US as the focus remains very much on events unfolding in Europe. If any further negative news is released from Greece today, investors may remain risk averse leading to more USD buying. Tomorrow will see attention on the Fed chairman Ben Bernanke`s speech with the market looking for clues on the possibility of another round of QE.

Uncertainty over Greek government weakens Euro

Toby — Tue, 08 May 2012 10:01:48 +0000

POUND
Sterling is hovering close to a 3 and a half year high against the euro but is down 0.34% vs. the USD. Expectations are for the pound to strengthen further in the short term if politicians fail to form a new Greek government after a shock election result that questioned the terms of the country’s international bailout. It is important to also note that the pound is not out of the woods as far as risk goes from the euro zone economic situation and debt contagion. In UK news the Royal Institute of Chartered Surveyors showed a large fall of –19% against –10% forecast.

EURO
The euro unsurprisingly is trading lower against the pound and dollar today and political uncertainty in Greece reduced confidence in the austerity plans aimed at tackling the euro crisis. In addition to this, investors are concerned about whether new French President Francois Hollande’s focus on growth would clash with Germany’s insistence on fiscal austerity. Today, investors will be turning their attention to the German Industrial Production number and a speech from ECB President Draghi.

US DOLLAR
The USD is taking full advantage of a weaker euro this morning and has made some gains vs. the pound amongst weaker data from the UK. Today sees a lack of significant US news resulting in USD volatility coming from further euro zone data with the market paying close attention to the ECB president’s speech. Any negative tone here is likely to result in renewed buying of the US currency.