Currency Market Update 24/08/10

[PhilBen]

Anyone who reads my updates.Due to a death in the family I apologise for not posting updates over the last few weeks. But I am now back working.

Currency markets range traded for most of yesterday morning as a lack of economic data releases kept focus on commodities and equities and the Euro, after initially losing ground due to weaker manufacturing data, recovered earlier losses.
The dollar received a boost in the afternoon after a drop in gold prices pushed the greenback higher, closing over 0.5% higher versus the pound.
Overnight the trend continued as the Federal Reserve Bank is currently on retreat. The Fed is expected to announce details of further quantitative easing measure aimed at ending the slowing trend in the U.S. economy and restoring the recovery.
Pressure from Asia added to dollar gains versus the euro and the pound after the Japanese government stepped up pressure on the Bank of Japan to action against the Yen’s continued appreciation. The Yen and dollar strengthened as investors began to anticipate future physical intervention by the BoJ.
German GDP revision for the second quarter showed no change to the 2.2% seen previous and gave the euro a brief reprieve although gains have no held. The only other data to be released this morning is European industrial new orders. In the U.S. existing home sales figures are expected later today.


Live IB rates at 9.12 am UK
GBP – EURO 1.219
GBP - USD 1.538
GBP- AUD 1.741
EURO - USD 1.261

[PhilBen]

Sterling traded to the downside yesterday after comments from the newest Bank of England MPC member Weale sparked fears of a second recession. Weale commented that the “U.K. faced a significant risk of falling back into recession and that growth forecast could be too optimistic.” With no U.K. economic data to give traders an alternate focus the pound weakened. U.S. existing home sales figures fell more than expected coming out at 3.83mln; traders had expected a figure of 4.63mln in comparison to June’s figures of 5.26mln. The dollar weakened across the board on fears that the U.S economy will continue to slow. Dollar losses were limited though as the concerns regarding a second recession outweighed the data.
Overnight the greenback maintained its upward trend as demand for the Yen eased. Comments from Japan’s Finance Minister reduced the expectation of imminent government intervention, saying he was “watching recent foreign exchange moves with great interest.”
The Euro continues to push higher this morning after the release of better German IFO business climate data. Business sentiment rose for the month of July by more than expected. There is no further U.K. or European data scheduled for today, in the U.S. durable goods order and new home sales figures are expected.


Live IB rates at 9.43 am UK
GBP – EURO 1.215
GBP - USD 1.543
GBP- AUD 1.736
EURO - USD 1.269

[PhilBen]

The release of better than expected business sentiment figures from Germany pushed the euro higher across the board and allowed the pound to make gains versus the dollar yesterday. German IFO business climate came out at 106.7 for August versus 106.2 in July. The single currency did struggle for the remainder of the morning trading session as Standard & Poor’s downgraded Ireland’s credit rating to Aa- citing concerns over the country’s ability to continue funding its financial sector.
Weaker U.S. durable goods orders and new home sales pulled the dollar lower as the data supports market opinion that the U.S. economy was slowing.

GfK consumer sentiment figures have built on the business sentiment figures of yesterday also coming out higher and have given the euro a boost in early trade.
There is no further European data scheduled for today; in the U.K. markets await the release of CBI distributive trades data and in the U.S. initial jobless claims are expected.


Live IB rates at 9.59 am UK
GBP – EURO 1.222
GBP - USD 1.552
GBP- AUD 1.75
EURO - USD 1.269

[PhilBen]

The positive German confidence figures over the last two days allowed equity markets to rally pushing the single currency higher across the board yesterday. Stock markets have seen a strong sell off earlier in the week as fears over the health of the global economy encouraged risk aversion.
Commodity markets continue to see a great deal of volatility, especially in Gold and have thus added to the ebbs and flows in dollar trade.
U.K. distributive trade figures beat consensus forecasts coming out at 35 versus the expected 20 and allowed for some sterling strength although the data was not enough to break the pound out of recent ranges. U.S. weekly initial jobless claims boosted the dollar in afternoon trade and have kept the trend in place overnight as fears for continued economic slowdown in the States eased.

Markets await the release of the all important U.K. and U.S. GDP figures, these are the first revisions to the second quarter growth figures.

Live IB rates at 10.00 am UK
GBP – EURO 1.22
GBP - USD 1.55
GBP- AUD 1.749
EURO - USD 1.271