Currency Market Update 10/01/11

[PhilBen]

The Euro continues to struggle on the exchanges maintaining the lower levels posted on Friday at this morning’s market open. Weaker European economic data kept the fear of continued economic weakness and sovereign debt concerns for Europe at the fore, German retail sales m/m for November dropped to -2.4% from 2.3% the previous month while EU Q3 GDP saw a slight downward revision to the quarterly figures. Portugal remains a focal point for Euro weakness as pressure on the country to seek financial aid from the EU remains constant.

U.S. data on Friday disappointed slightly after non-farm payrolls rose less than expected. The number of jobs created in December was 107K, markets had expected a 175K increase from the upwardly revised 71K. The unemployment rate fell to 9.4% from 9.8% in November. Safe haven demand for the U.S. Dollar increased as the data pushed the greenback sharply higher, the overall employment trend remains positive and at a pace considered to be reasonable to maintain economic stability thus providing currency support.

The Pound is trading lower this morning after the overnight release of weaker Halifax house prices figures, prices fell -1.3% in December and with uncertainty over the impact of the recent VAT increase weighed on Sterling. There is no significant economic data scheduled for release today, only minor European sentiment and U.S. employment trends data is expected.

Live IB rates at 10.17am UK
GBP – EURO 1.201
GBP - USD 1.549
GBP- AUD 1.565
EURO - USD 1.289

 

[RBS]

Do you write for www.poundsterlingforecast.com ?

 

[PhilBen]

Do you write for www.poundsterlingforecast.com ?

No I don't

 

[RBS]

Are you Forex trader?

 

[PhilBen]

Are you Forex trader?

I was upto a while ago.But still have a lot to do with it

 

[RBS]

I was upto a while ago.But still have a lot to do with it

Made you big bucks and retired early?

 

[PhilBen]

Far from it and to young to retire

 

[PhilBen]

A lack of economic data yesterday kept the markets focused on sovereign debt and contagion concerns in Europe. Portugal remains under the spotlight with its pending bond auction and analysts are concerned that yields on Portuguese government bonds would exceed sustainable cost levels for the country and thus risks the spread of the sovereign debt problems to Spain.

Speculative trade lifted the single currency in afternoon trade after rumours began to circulate that the Swiss government may take active measures to weaken its currency, particularly against the Euro. Overnight gains remained intact after Japan announced its intensions to buy Euro bonds.

The Pound has been trading along wider market movements as local economic data remains to the downside and focus remains on European economic concerns. The BRC retail sales index showed like for like yearly sales fall -0.3% from 0.7% as consumers were plagued by adverse weather and were concerns over future economic prospects.

There is no further European or UK data for today while in the US only the Fed’s Redbook chain-store sales report is expected to be released.

Live IB rates at 10.00am UK
GBP – EURO 1.202
GBP - USD 1.551
GBP- AUD 1.578
EURO - USD 1.292

 

[PhilBen]

The euro continued its upward trend yesterday although gains were gradual as investors remained cautious ahead of today’s Portuguese bond auction and prepare for tomorrow’s Spanish auction. Rumours were abound yesterday that the European Central Bank may be an active participant in today’s bond auction and pushed the single currency higher as investor confidence rose and concerns amongst market participants eased. This confidence has kept the euro trading higher through Asian trading overnight and has aided the pound versus the dollar due to the fact that sterling has been taking its cues from EUR/USD movements.

Economic data returns to the fore today as analysts await the release of UK trade balance and EU industrial production figures, while keeping an eye on bond markets. In the US, mortgage data is expected this afternoon.

Live IB rates at 10.00am UK
GBP – EURO 1.20
GBP - USD 1.563
GBP- AUD 1.578
EURO - USD 1.301

 

[PhilBen]

After a week of solid gains the Euro weakened on Friday after risk aversion returned to the market. European and U.K. data initially supported their respective currencies before the opening of U.S. markets. German HICP inflation rose 1.2% from 0.1% m/m in December while European inflation rose to 0.6% from 0.1% for the same period, both figures were in line with expectations but support the European Central Bank’s hawkish policy stance. U.K. PPI inflation rose only slightly more than expected to 0.5% from 0.4% in December.

Mixed U.S. data saw the Dollar struggle in early afternoon trade, U.S. CPI and industrial output figures rose above expectation but a fall in retail sales in particular pulled the greenback lower. Retail sales fell to 0.6% from 0.8% m/m for December raising some concerns over economic stability and a need for support by the Fed while the University of Michigan sentiment index fell to 72.7 from 75.4 in January.

Dollar fortunes reversed later in the day and it has maintained its upward trend this morning after China announced it was again raising the banks’ reserve requirements by 50 basis points and risk aversion returned. Fitch rating agency downgraded Greece’s debt to junk, they are the last agency to do so and this has raised additional concerns regarding the stability of Portugal. Friday also saw reports that Germany was easing its opposition to increasing Europe’s debt support package that weighed further on the Euro as it seems to reaffirm market opinion that more debt troubles are yet to come.

Thin trading volumes can be expected today as the U.S. remains closed for a market holiday and with no economic data scheduled for release risk aversion and technical trading will likely dictate currency markets.

Live IB rates at 9.26am UK
GBP – EURO 1.194
GBP - USD 1.584
GBP- AUD 1.60
EURO - USD 1.325

 

[numbergroup]

Hi Phil,

Not having a moan..... But I think your just article stuffing on here, and I don't think it's needed ? Sorry

 

[PhilBen]

Hi Phil,

Not having a moan..... But I think your just article stuffing on here, and I don't think it's needed ? Sorry

Well you are welcome to your view, but what I will say is you do not have to click on it or read it. Also I pay to be a member on this forum you are a free member with 33 posts, so your views mean very little when you are out spoken. There are lots of things I would not read on this forum but I don't think people should not post it. You should put more effort into learning things from other members instead of stiring people up.