Currency Market Update 4/01/11

[PhilBen]

As 2011 opens the first U.K trading session sees the Euro under pressure after making some gains over Christmas. The currency bloc welcomed Estonia to the single currency on the 1st Jan although there is no suggestion that this event is the cause of the drop in Euro value this morning.

Anticipation of the Unemployment data from Germany appears to be the primary cause of concern for traders this morning and the release at 9am confirmed that the number of jobless in Germany rose to a seasonally adjusted 3.152million. The Euro fell over 0.5 cents against the Pound ahead of the release and had failed to recover.

It appears Sterling crosses are recovering after the New years day close with the Pound up against the Euro and Dollar in early trade. Over the Christmas break and in a response to a fall in Chinese manufacturing output the U.S. Dollar had strengthened with safe haven buying.

We await a raft of data this morning in the U.K. with the release of Consumer credit, mortgage lending and Money supply data. European Inflation is also reported this morning whilst this afternoon we see U.S Redbook, durable goods, factory orders and retail sales data.

Live IB rates at 10.11am UK
GBP – EURO 1.164
GBP - USD 1.561
GBP- AUD 1.546
EURO - USD 1.34

 

[PhilBen]

Sterling rose yesterday after U.K Manufacturing activity expanded at the highest rate for 16 years boosting expectations of an interest rate rise this year. Mortgage approvals unexpectedly rose in Nov, whilst take up of unsecured credit fell. Market response to this data was immediately in favour of Sterling with the Pound making further gains against the Euro and Dollar. However there are suggestions today that Sterling’s strong start to 2011 may be short lived when the of rising taxes, falling public spending and climbing prices creating uncertainty for the Bank of England and the market.
Risk aversion and the Markets enthusiasm for Gold and the U.S Dollar waned slightly yesterday as publication in the states of manufacturing data showed that this sector continues to be the driving force for the U.S recovery. North American manufacturers reported a rise in orders of 0.7% over an expected drop of 0.9%. This data saw traders suddenly keen to invest elsewhere, sell Gold which fell $35 an ounce on the announcement.
Euro zone inflation flash figures yesterday showed inflation still above target which bolstered the Euro during yesterday’s session, however this morning the Euro was considerably lower ahead of Euro zone PMI data. However, whilst the services PMI showed a slowdown from November at 54.2 it was still higher than the expected 53.7. The composite PMI data held firm at 55.5 and we saw an immediate reversal of the Euros fortunes recovering to it’s opening level against the Pound and the Dollar.
This morning we await U.K PMI whilst from the Euro zone we have industrial orders and producer prices . This afternoon sees the publication of U.S Mortgage and ADP Employment data.


Live IB rates at 9.38am UK
GBP – EURO 1.173
GBP - USD 1.555
GBP- AUD 1.554
EURO - USD 1.326