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Friday 2nd May 2008 Interbank GB POUNDS / EURO 1.2823 EURO / GB POUND 0.7799
Dire warnings imply annual UK house price falls in high single
digits in 08.
Pounds:
Sterling has had a nice short term bounce against the majors after a
further cut in US rates and negative sentiment
in Europe weigh on their respective currencies.
In the real world
economy, reports suggest that the
situation in the UK is getting bleaker by the day. Jim O’Neill the chief
economist at Goldman Sachs, who correctly
predicted the US house price crash, has claimed that the UK economy and
housing market would likely
be the worst hit of the world’s leading economies.
Bank of Scotland
analysts also suggest that Sterling has
much further to fall as the Bank of England will have little choice
other than to continue cutting interest rates.
Amidst all this doom and gloom the Bank of England’s bi-annual Financial
Stability report suggests that the
worst of the credit crunch could be over.
Confusion reigns. With the GBP/EUR
over 1.27 at the moment it
might be a good call to lock in and take advantage of the short term
move.
Euros:
May 1st is a European holiday and as such markets
throughout Europe are largely closed for business.
Yesterday
Eurozone Consumer Confidence figures and the Business Climate Indicator
were both negative and despite
another rate cut in the US the Euro has fallen back against the USD and
Sterling.
With markets closed in
Europe there is less liquidity in the Foreign Exchange markets therefore
we could see some large moves today.
No Data Today.
General Euro Currency News:
• Soft commodities: Agricultural goods continue to edge higher
• Oil and Energy costs continue to rise unabated
• Australian dollar still holds at high levels
• Chelsea beats Liverpool to head to Moscow for Final against Man Utd.
Wednesday 30th April 2008 Interbank GB POUNDS / EURO 1.2602 EURO / GB POUND 0.7935
UK house prices post their first year on year drop for 12 years in
April.
Pounds:
The pound weakened off against the majors yesterday after weak economic
data pulled down the value of
sterling. We saw a 2 cent drop against cable and over 1 per cent drop
against the euro.
Sales volumes at UK
retailers fell to their lowest level since November 2005 in April, the
fall leading to a balance of –26 in April
from +1 in March. UK consumers were also feeling gloomier than they have
for nearly 16 years as pessimism
about the outlook for the economy deepens. A survey released by polling
form GfK NOP measured that consumer
confidence had fallen to –24 in April from –19 in march, its lowest
level since November 1992. There
was also comments made by the Bank of England’s Blanchflower saying the
UK economy may now be at a
tipping point, and if policymakers wait too long for data to prove the
economy is slowing sharply, that may be
too late.
No data today.
Euros:
The euro is holding steady against the dollar as all eyes
await the Fed’s decision in the US. The euro looks
poised to weaken though if the Fed signals a pause in its rate cutting.
The euro made a positive move against
the pound as poor economic data hurt sterling and sent the rate from
0.7836 to 0.7936.
There were talks of
strikes in the Eurozone biggest economy as public sector workers in
Berlin were set for an all-out strike later
this week in support of higher pay. In some parts of Germany, pay is
rising more quickly than at any time
since 1996, according to data released by the national statistics
office.
Inflation is a real concern and higher
pay rises could make it hard to reverse the continuing rising inflation
level in the eurozone.
Data at 10.00am: Eurozone CPI expected at 3.4% from 3.5% previous,
Unemployment rate expected at
7.1% unchanged, Consumer Confidence expected at –13.0 from –12.0
previous.
General Euro Currency News:
• UK house prices could drop around 30% over the next couple of years -
an MPC member said
• The Bank of Japan kept its key policy rate unchanged at 0.50% as
expected, which surprisingly lead to
some currency players buying the yen. It looks like those players
expected the BoJ to cut its rates.
• World oil prices are holding little changed this morning ahead of the
Fed meeting later this evening.
June Nymex crude had dropped five cents lower than yesterday now trading
at $115.58 per barrel.
Tuesday 29th April 2008 Interbank GB POUNDS / EURO 1.2760 EURO / GB POUND 0.7836
The pound rose to a three week high against the euro this morning after
the single currency was weakened
by comments regarding eurozone inflation worries.
The pound has gained
over 1 cent since yesterday’s UK
opening, from 1.2654 to 1.2757. Against the dollar there was also a
small rise from $1.9801 to $1.9875.
Looking at the jobs market, there was gloomy news from the Chartered
Institute of personnel and Development,
as the they said the labour market was now close to its peak and that the
rise in unemployment could
be more sudden and sharp than in previous economic downturns.
Data at 9.30am: Net Consumer Credit expected at 1.1B from 2.4B previous,
Mortgage Approvals expected at
66k fro0m 73k previous.
At 11.00am— CBI Distributive Trades Report.
Euros:
The euro suffered yesterday after comments by ECB members
regarding the continuing worries over rocketing
inflation weakened the single currencies stance against both the dollar
and sterling.
We saw half a cent
fall against the dollar, from $1.5645 to $1.5573, and against the pound
there was over half a cent fall from
0.7902 to 0.7847. ECB member ‘Klaus Liebscher’ highlighted inflation
levels are too high and are unlikely to
fall as quickly as earlier anticipated. He continued “My best guess at
this very moment is that we will see a
decrease in inflation (rate), but probably not as much as forecast a
couple months ago, and therefore one
must be very very concerned about the general development and the
general outlook.
Trichet reiterated the
ECB’s attention to inflation Monday but also repeated comments made last
week in a speech in Vienna, saying
sharp fluctuations in foreign exchange rates are of concern to the ECB
and “the possible implications for financial
and economic stability.”
Data at 9.00am:
Bloomberg German Retail Purchasing Manager Index & Eurozone Retail PMI
General Euro Currency News:
• Oil prices are lower this morning as the US dollar held its ground
against the euro and amid expectations
that a supply disruption in the UK would soon be resolved, currently
trading at $118.55.
• Gold is down $1.45 per troy ounce to trade at $891.75 in placid
activity before the Fed’s meeting tomorrow.
• The yen has fallen to a two month low against the dollar and stayed
around 207.00 against the pound
Friday 25th April 2008 Interbank GB POUNDS / EURO 1.2705 EURO / GB POUND 0.7871
UK retails sales in line with expectations.
Pounds:
UK retail sales were in line with expectations on the month in March.
Retail sales slid 0.4% on the month, the
biggest monthly drop since January 2007—but gained 4.6% on the year in
March. The data will be of strong
interest to the Bank of England, which has cut the benchmark interest
rate three times since December, reducing
it to 5.00% from 5.25% earlier this month.
Policy makers have repeatedly
noted the resilience of the
retail sector and will keep a close eye on Today’s first quarter Gross
Domestic Product data at 9.30am.
Economist
are excluding a rate cut in May by the central bank and leaning towards
an easing of rates in June.
The
pound gained against the euro on the back of weak economic data in the eurozone, gaining over 1 cent from
1.2476 to 1.2596. Against the dollar, the pound has continued to decline
as we have seen nearly a cent loss
for the third straight day, to be trading at $1.9693.
Data at 9.30am:Gross Domestic Product QoQ expected at 0.4% from 0.6%,
YoY expected at 2.6% from 2.8%
Euros:
The euro had its worst day of the week on Thursday as
economic data weighed heavily on the single currency,
pulling it down against its major rivals. Against the dollar the euro
dropped over 2 cents and against the
pound, over a cent was lost. This was on the back of the German Ifo data
which is a business confidence report.
It showed a cooling in April in light of record high oil prices and a
stronger euro, hitting its lowest level
since January 2006.
The ifo business index fell to 102.4 from 104.8 in
March, well below the economists forecast
of 104.3. Elsewhere in the eurozone , French and Belgian business
sentiment sharply declined, with the
Belgian reading posting its largest monthly fall in the history of the
indicator.
Data at 9.00am: Eurozone M3 YoY expected at 106% from 11.35 previous.
General Euro Currency News:
• Japanese consumer prices rose at their fastest pace in a decade in
March due to sharp increases in
energy and food costs. There has also been speculation that the BoJ may
hike interest rates by the end
of the year.
• Oil has dropped on the back of a strengthening dollar and rising US
crude stockpiles, prompting traders
to take profits. Since yesterday there has been a fall of over 2 cents
to $115.60 per barrel.
Thursday 24th April 2008 Interbank GB POUNDS / EURO 1.2476 EURO / GB POUND 0.8015
BoE’s MPC voted 6-2-1 to cut interest rates by 25 basis points in April.
Pounds:
The Bank of England’s Monetary Policy Committee voted in a three way
split when they dropped interest rates
by 25 basis points in April. Six members voted to cut rates by 25 basis
points, 2 called for rates to be left
unchanged and one member called for a 50 basis point cut. The split was
a surprise to the markets and the
first three way split in the MPC vote since May 2006. The markets had
expected a vote of 9—0 to cut rates
and the pound dipped on the back of the vote. A back to back cut in
interest rates now seems less likely.
There was also more gloomy news to hit the UK housing sector, mortgage
approvals sunk to a record low in
March, falling to 35,417 from a revised 43,147 in February.
The pound
also took a knock back when Andrew Setance, a member of the bank of England’s Monetary Policy Committee,
said in a speech that a speedy recovery
in the pound is doubtful. “The prospects for sterling are still very
uncertain. But there doesn’t appear
to be much evidence to support a quick and sustained unwinding of the
recent decline”. It’s really quite noteworthy
when a central banker says anything remotely negative about their
currency
Data at 9.30am:Retail Sales expected at –0.3% from 1.0%. At 11.00am—CBI
Quarterly Industrial Trends.
Euros:
The euro was slightly lower against the dollar as investors cashed in
some of their profits and weak economic
data weighed in on the single currency.
Germany’s manufacturing Sector
fell to 53.6 in April, from 55.1 in
March. Economists had predicted the manufacturing index to fall to 54.8.
We saw the euro fall from its near
record highs of $1.60 to loose 1.5 cents against the greenback to trade
around $1.5851. Against the pound
the single currency feared better as the MPC minutes did little to help
sterling. The euro was range bound,
only moving 10 ticks from yesterdays opening, currently at 0.8015.
Data at 9.00am: German IFO expected at 104.3 from 104.8.
General Euro Currency News:
• The Reserve Bank of New Zealand kept its interest rates steady at
8.25% as expected, toning down its
hawkish rhetoric by acknowledging significant downside risks to the
domestic economic outlook.
• Oil was lower as the dollar rebounded and a US government report
showed a build in crude supplies,
currently trading at $117.82.
Wednesday 23rd April 2008 Interbank GB POUNDS / EURO 1.2490 EURO / GB POUND 80.04
Markets await key Bank of England Minutes released at 9.30am today.
Pounds:
The pound had a mixed day yesterday as it continued to digest the news
regarding the Bank of England's
cash injection to ease the liquidity crises. Against the euro we were
stuck in a narrow range, only moving
10—20 pips from where sterling started out yesterday morning. We saw
more of a move on cable as the dollar took a turn for the worst and seemed to be heading towards the key
$2.00 mark again. We did hit this
level very briefly last night but have now dropped off to be around the
$1.99 level this morning.
There was
some glimmer of hope for the pound as a key policy maker for the Bank of
England hinted that hopes for the
central bank to slash interest rates have been undermined due to the
Banks rescue plan for credit markets
freeing it up to use rates to fight inflation.
Data at 9.30am: Bank if England Minutes
Euros:
The euro rose to an all time high yesterday against the dollar as poor
economic data from the US and a
change of stance by members of the ECB regarding interest rates pushed
the currency cross over the $1.60
level foe the first time. Last night we did get to $1.6018 but fallen
off slightly this morning.
It seems that the ECB officials are seriously concerned about inflation risks in the
euro-zone, which has encouraged investors to
buy euros on the belief that the central bank might raise interest rates
soon.
Two European Central Bank governors indicated yesterday that the ECB
might raise rates if inflation didn’t subside, clashing with the
prevailing market expectations of rate cuts later this year.
Data at 9.00am: Euro-zone Purchasing manager Index Services expected at
51.4 from 51.6, Euro-zone PMI
Manufacturing expected at 51.6 from 52.0 previous.
General Euro Currency News:
• The Bank of Canada has cut interest rates buy 50 basis points to
3.00%.
• The Reserve Bank of New Zealand meets later this evening to determine
which way they move on in-
terest rates and is widely expected to leave them unchanged at 8.25%
• Oil hit another record high in Asian trade as the $120.00 level was
nearly breached. A high of $119.90
was hit as the falling dollar pushed up the price of the valuable
commodity.
Tuesday 22nd April 2008 Interbank GB POUNDS / EURO 1.2507 EURO / GB POUND 0.7996 Sterling falls as Bank of England announces liquidity injection.
Pounds:
Yesterdays start for sterling looked promising as the pound kept its
gains over the weekend, and the widely
anticipated Special Liquidity Scheme to be announced by the Bank of
England. The smile was soon taken of
the pound as it seemed the markets thought that the £50bn figure
announced wouldn’t be enough, as some
analysts thought it should be closer to the £100bn level.
The pound
dumped its gains early morning as it saw
a fall of 2 cents against the euro, from 1.2654 to 1.2439, and a fall of
over 2 cents against the dollar, from
2.0028 to 1.9785 this morning.
The news that the Royal Bank of Scotland
was due to announce that it will
approve a £12bn rights issue to shore up its balance sheet amid the
ongoing credit crunch also seemed to
weigh on the pound.
No data today.
Euros:
Yesterday the euro took a stab at $1.60 against the greenback as the
dollar rally from last week came to an
end. The euro reached $1.5848 and a climb to the symbolic $1.60 level
could set off even more dollar selling.
Some European Central Bank officials suggested yesterday that interest
rates may have to be increased if
inflation becomes more of a problem in the euro zone. That also gave the
euro a big lift during Monday’s session.
ECB’s Mersch indicated that inflation in the euro zone will likely
remain above 3% through late autumn
this year.
Data at 9.00am: Italy Trade Balance Non-EU
General Euro Currency News:
• The Bank of Canada is widely expected to cut interest rates by 50
basis points this afternoon to leave
the benchmark rate at 3.00%, to support the economy in light of a US
downturn.
• Oil was up again yesterday as reports of pipeline sabotage in Nigeria
helped boost prices. Nymex May
crude was trading at $117.43.
• Gold was down $1.40 per troy ounce to sit at $915.70.
Monday 21st April 2008 Interbank GB POUNDS / EURO 1.2530 EURO / GB POUND 0.7981
Alistair Darling (UK Chancellor) to announce £50bn bank bailout.
Pounds:
The pound managed to keep hold of its gains made late last week against
both the euro and dollar. We have
seen the pound pull itself back from the 1.25 level to just squeeze over
1.26 this morning and against the
dollar, it has broken the $2 mark.
Today the Bank of England will
announce a scheme which will see it lend
money to banks in return for collateral in a bid to help the troubled UK
mortgage market. The initial offer is
£50bn but senior treasury sources told the Times yesterday that further
cash injections up to a total of
£100bn were possible.
The news seems to have been warmly welcomed by
sterling as current levels have
shown.
The pound seems to have shaken off the poor economic data
released in the early hours which has
shown the average asking price for a home in the UK posted its weakest
annual gain in almost three years in
April and prices could crash unless there is immediate action to improve
mortgage liquidity, online estate
agent Rightmove said.
Euros:
The euro is slightly lower against the dollar and sterling this morning
as we have seen a cent drop against the
greenback and over half a cent lost against the pound. ECB’s Liikanen
has warned “Inflation risks are real” as
he reiterated the need for the European Central Bank to not fail in its
battle against inflation, for such a failure
would have a long, negative impact in the eurozone’s growth. He said
“Our prime mandate is price stability.
And history shows if you fail there, it’s a long negative impact on
growth and its very hard to get back”.
Data at 9.30am: Germany’s IW-Cologne Institute New Forecasts Survey.
Speakers: ECB’s Liebscher, Noyer and Papademos.
General Euro Currency News:
• The yen has been sold off since Friday as risk appetite seems to be
back on the cards. The dollar has
gained a couple of cents against the Yen and sterling has rose from
204.20 Friday morning to 209.01
in Asian trade. Current level is 207.10.
• Oil is up again today as prices are threatened to go even higher today
after members of the OPEC oil producers cartel rejected calls to raise
output. Current price is 116.69 after hitting over 117.0
Friday 18th April 2008 Interbank GB POUNDS / EURO 1.2656 EURO / GB POUND 0.7901
Sterling rallies against its major rivals.
Pounds:
The pound took a welcome breather yesterday as it finally clawed back
some of its losses against
both the euro and the dollar. We saw just under a 2 cent gain against
the single currency from 1.2347 to
1.2530 and over a 2 cent move back towards the $2.00 mark on cable,
currently at $1.9965. This seems to
be on the back of inflation worries and the prospect that the Bank of
England would announce plans to inject
liquidity into money markets, and broaden its collateral window to
include mortgage-backed securities.
The
UK’s public inflation expectations rose in March to their highest levels
since 1998 with expectations for the
year-ahead inflation rising to 3.7% and two years ahead coming in at
1.2%. With inflation expectations far
above the target set for the Bank of England of 2.00%, the data will
worry policymakers at the central bank.
There was also comments by the BoE’s chief economist ‘Charlie Bean’
saying that a sharp fall in sterling’s
effective exchange rate since August is roughly equivalent to a
three-percentage-point cut in the UK Bank
rate. Higher food and energy prices, along with a weaker pound, mean
that consumer price inflation is likely
to spike above the 3% in the second half of the year. The relatively
hawkish tone of his remarks indicates that
the BoE will move cautiously in cutting rates.
Data at 9.30am: Public Finances expected at 18.0B from 2.9B previous.
Euros:
The euro is still trying to break out of its close range against the
dollar, and gains made yesterday seemed to
be pushing it in positive territory. The single currency was heading
back towards its highs of $1.5979 as the
dollar took a stumble, currently trading at $1.5939.
Against the pound
the euro had a bad end to the weak as
the single currency gave back some of its recent gains. We saw a drop of
under 2 cents against the pound,
currently trading at 0.7980 after inflation worries in the UK and a
potential move by the BoE to help liquidity
problems.
The eurozone’s foreign trade balance posted its first surplus
in three months in February despite
the soaring euro.
Data already released today: German PPI up 0.7% from
Feb, only 0.5% expected.
General Euro Currency News:
• Oil is still near record highs at $115.12/barrel due to a weak $ and
concerns about falling supplies.
• The Reserve Bank of Australia said it had bought residential
mortgage-backed securities to help improve
illiquidity in the frozen securitization market.
• Spain housing prices rise below inflation in April
1st time in 190
years it means that housing prices
actually declined for the first time since end 1997.
Thursday 17th April 2008 Interbank GB POUNDS / EURO 1.2542 EURO / GB POUND 0.7973
Euro hits another record high against sterling close to 0.8100.
Pounds:
UK unemployment fell for the 18th consecutive month in March but the
drop was smaller than expected and
February’s figures were revised to show the first rise in the claimant
count for 17 months. The unemployment
rate was left at 2.5%.
This data did little to ease the continuing fall
of the pound as record lows were posted
against the euro to hit 1.2447, currently trading at 1.2452.
The pound
faired better against the dollar as a US
economic data suggested there may be interest rate cuts ahead in the US
as well as the UK, cancelling out
each other and leaving cable to be trading in a close range of
1.9680—1.9720.
Euros:
The euro hit a new record high against the dollar and sterling yesterday
as global economic data went in the
way of a potential stronger euro and weaker dollar and pound. We saw the
$1.60 level nearly hit against the
dollar as eurozone consumer prices rose at an unprecedented 3.6% on the
year in March. This is far beyond
the European Central Bank’s 2% target ceiling that will further reduce
any chance of a near term cut in interest
rates.
The euro also saw a surge against the pound as we were 1 pip away
from breaching 0.8100, currently
trading at 0.8087. There seems to be no halt in the march of the euro at
present as economic data
continues to point towards interest rates in the UK and eurozone heading
in favour of a stronger euro.
Data at 10.00am: Euro-zone Trade Balance expected at –3.5B from –10.7B
General Euro Currency News:
• Oil has hit another record high overnight as we saw the $115.00 a
barrel hit amid concerns about sagging
US gasoline supplies ahead of the peak demand summer months.
• Spot gold is down $1.58 at $943.92 in a pause from its recent
recovery.
• The Aussie dollar has continued to gain in strength on the back of
strong commodity markets and continued
Chinese growth having a strong influence on the Aussie currency.
Wednesday 16th April 2008 Interbank GB POUNDS / EURO 1.2425 EURO / GB POUND 0.8048
Euro hits all time high against the pound at 0.8060.
Pounds:
The pound hit record lows against the euro yesterday as economic data
released showed an easing on inflation
worries, which in turn has raised hopes of lower interest rates.
We saw
a record low of 1.24 breached,
current price trading at 1.2420. Price cuts by retailers fighting to
keep hard pressed consumers in the shops
last month triggered the steepest year on year falls in the price of
goods for nearly two years, helping to cap
inflation.
UK CPI remained steady at 2.5% as expected. The figures
reignited City speculation that the Bank of
England could now deliver a back to back cut in interest rates next
month, on the heels of last weeks quarter point
reduction to 5 per cent
Euros:
A great day for the euro yesterday as it saw a new record high reached
against sterling. A rate of 0.8060 was
hit as economic data in the UK weakened off the pound. This was in spite
of economic data released from
Germany, the ZEW sentiment index which declined to a level of –40.7 in
April from –32.0 in March, well below
the historical average.
The economic expectations for the euro zone have
worsened slightly as well. Against
the dollar the euro was range bound, still not being able to break above
the $1.59 level.
Data at 10.00am: Euro-zone Consumer Price Index expected at 3.5% from
3.3% previous.
General Euro Currency News:
• Silvio Berlusconi’s return to power in Italy could be a nightmare come
true for the European Central
Bank, opening the way for a Rome-Paris axis with the political muscle to
force a change in monetary
policy. A very strong euro is hurting Italy’s economy!
• Oil hit a new record high overnight at $114.08 a barrel, supported by
concerns over supply issue, a
drop in Russian oil production and a stronger dollar.
• Gordon Brown’s appeal to UK banks to pass on interest rate cuts falls
on deaf ears.
Tuesday 15th April 2008 Interbank GB POUNDS / EURO 1.2433 EURO / GB POUND 0.8043
Pound lower on weak Retail Sales data and RICS housing survey.
Pounds:
Sterling started the day off on the back foot Tuesday after weaker than
expected data was released just after
midnight. The British Retail consortium revealed that like-for-like
sales fell by 1.6% on the previous year. This
was the first fall in two years in March and the drop was unexpected as
the markets had only predicted a fall
by 1.0%.
The RICS survey of housing in England & Wales was also poor as
it showed sentiment at its lowest
level for 30 years in March as the net balance declined to –78.5% from
revised –65.7 in February. According
to RICS spokesman Jeremy leaf; ”The slowdown in prices is directly
attributable to a lack of available finance
which has hit demand.”
In normal circumstances, the BRC figures may well
have cemented market expectations
that the Bank of England will cut borrowing costs in May for the second
month running. However, with
inflation running high, the BoE may well keep its benchmark Bank Rate at
5.00%.
The pound has hit an all
time low against the euro this morning hitting 1.2433.
Data at 9.30am: CPI expected at 0.6% m/m from 0.7%.
Euros:
The euro has hit record highs against the pound as 0.8043 has been hit
in Tuesday morning trade.
Pressure is
on the pound after weaker than expected economic data was released in
the early hours.
Against the dollar
the euro is range bound between 1.58—1.5850 ahead of data from both side
of the Atlantic. The European
central Bank, the key ally for any intervention to curb the dollars
depreciation versus the euro, has explicitly
refused taking any steps that would be necessary for intervention to be
successful namely, a rate cut.
Looking
ahead to today, Germany’s ZEW will be closely watched for evidence of
improving sentiment in the German
economy.
Data at 10.00am: German ZEW expected at –30.0 from –32.0,
Eurozone ZEW. Expected at –
33.0 from –35.0 previous.
At 1.30pm PPI ex 0.7% from 0.3% previous.
General Euro Currency News:
• Oil prices have hit a new trading record above $112 a barrel this
morning after the US dollar fell further
and crude supplies to the US and elsewhere were disrupted along with
fears that Russian output
has hit its peak. Current price is $112.48 per barrel.
• Spain's economy is slowing more sharply than expected after the
implosion of the country’s property
bubble. The Spanish government has announced plans to spend €10B a year
on an economic stimulus
package.
Monday 14th April 2008 Interbank GB POUNDS / EURO 1.2554 EURO / GB POUND 0.7966
ECB council members highlight inflation worries—no room for rate
cuts!
Pounds:
The pound is down slightly against the dollar this morning but just
holding above the $1.97 level. It’s a similar
story against the euro as there is only a 25 pip movement from Friday.
In a busy week for UK data, economists surveyed by Dow Jones newswires expect inflation, as measured by
the consumer price index, to have
accelerated further above the Bank of England’s 2% target in March,
driven by rising utilities bills and high
food prices. Producer price index is also expected to have accelerated
in monthly terms and remained steady
at a high level on year, reflecting the persistent cost pressures from
the weak pound and struggling commodity prices.
Data at 9.30am: Producer Price Index expected at 1.9% mom from 1.7%
previous.
At 24.01 BRIC Retail
Sales and RICS House Price Balance.
Euros:
The euro is higher against the dollar this morning, continuing its climb
from Friday afternoon. Even a signal
from global financial leaders of concerns about currency volatility in
general may not help the dollar’s demise.
RBS currency strategist Masafumi Yamamoto is looking for the euro to
rise to $1.62 by end-June.
On Friday
we saw ECB’s Weber say that he doesn’t share the International Monetary
Fund’s view that there is room for
an interest rate cut by the central bank. On Sunday another ECB member
‘Wellink’ also added that upside risk
to inflation and the possibility price pressures from global commodities
will fail to subside growth, again reiterating the view that the European Central Bank has no room to loosen
monetary policy.
General Euro Currency News:
• The Group of Seven leading economies fired a surprise weekend warning
shot at foreign exchanges
over their assault on the greenback. In the first significant shift in
their stance on exchange rates for at
least four years, the G7 finance ministers and central bank governors
used a big change in their usual
boilerplate language on currencies to warn markets that the dollar
should not be seen as a “one-way-
bet”.
• Oil prices are down 40 cents to $109.74 on back of economic concerns
and buoyed US dollar.
Friday 11th April 2008 Interbank GB POUNDS / EURO 1.2508 EURO / GB POUND 0.7995
The Bank of England cuts interest rates by 25 basis points to 5.00%.
Pounds:
The Bank of England cut its interest rates by 25 basis points to 5.00%
yesterday which was in line with market
expectations. There was a chance of a more aggressive cut by 50 basis
points which saw the pound
weaken for most of this week, hitting all time lows against the euro.
There was an initial rally by the pound
after the cut, as sterling breathed a sigh of relief that the more
aggressive 50 basis point cut passed.
The
accompanying statement by the central bank showed the deterioration in
financial markets and acknowledged
the deterioration in overseas growth prospects. The statement also
reinforced market hopes for a continuation
of the banks easing cycle.
Before the rate cut the pound was trading at
1.2460 and then after rallied to
1.2550 before falling back to 1.2460 this morning. It was a similar
story for cable as we are trading at the
same levels as yesterday open—1.9735.
No data today.
Euros:
The ECB left its base rate on hold at 4.00% which again was in line with
market expectations. The following
press briefing with ECB President ‘Jean Claude Trichet’ showed no
inclination to cut interest rates. The ECB
President also reiterated the central bank’s concerns over inflationary
risks in the euro-zone economy, while
acknowledging downside risks to economic growth remained.
Trichet said
the latest economic data confirmed
short term upward pressure on inflation and that the ECB’s goal remained
price stability in the medium term.
The euro continued its strong stance against the pound and the dollar as
it is just off record highs against
both currencies.
Data at 11.00: Euro-zone OECD Leading Index.
General Euro Currency News:
• The central bank in South Africa raised rates by 50 basis points to
11.50%.
• There was also an interest rate rise in Iceland as the central bank
also raised interest rates by 50 basis
points to 15.50%. Recent global economic turmoil has thrown the nations
currency into turmoil.
• Oil traded lower after losing 49 cents but still remained near record
highs—May Nymex crude traded at
$109.62
Thursday 10th April 2008 Interbank GB POUNDS / EURO 1.2547 EURO / GB POUND 0.7970
Breaking news:
Bank of England cuts interest rates by 0.25% to 5% as expected
Another record low for sterling as it hits 1.2459 against
the euro.
Pounds:
Sterling started out the day yesterday on the back foot after the day
before record low against the euro. Initially
we saw a small gain for the pound as better than expected UK
manufacturing output beat expectations
for a second successive month in February coming in at 0.4% with the
consensus at 0.1%. But the small gain
that the pound made was soon lost as sterling spiralled downwards and
another record low was hit.
This
morning we have seen 1.2459 as the markets are expecting a 25 basis
point rate cut by the Bank of England
today. It seems sterling is finding it hard to find support from
anywhere at present, even with unexpected
positive economic data released, the pound continues its path downwards
against the majors.
Data at 9.30aam: Visible Trade Balance expected at –7500B from –7.503B.
At 12.00 The BoE Rate Decision
expected to cut rates by 25 basis points to 5.00%.
Euros:
The single currency rose to record levels yesterday
against the pound as 0.80 was hit, and this morning the
euro has continued its relentless march on the pound, trading near
0.8019.
Against the dollar the euro also
gained over 1 cent to be trading at €1.5821. The next target level
against the dollar is put at €1.59.
Yesterday
we saw economic data from the eurozone showing that economic growth had
slowed in the final three
months of 2007 as consumer and government spending fell. The figures
came in at 0.4% on the month and
2.2% on the year, bang on expectations.
Looking ahead, the ECB are
predicted to keep interest rates unchanged
at 4% but it will be the ECB announcement which follows the decision
that has the greatest potential
to move markets. It would be surprising if the ECB softens its stance on
inflation, indicating a near-term rate
cut.
No interest rate cuts are forecast in the eurozone until near end
of 2008.
Data at 12.45: European Central Bank Rate Decision expected to leave
unchanged at 4%.
General Euro Currency News:
• Oil rose over $2.00 per barrel yesterday to hit $110.81 as an
unexpected drop in US crude inventories.
• The Singapore dollar rose to an all time high against the US dollar
after the central bank tightened
policy in a surprise move that boosted currencies across Asia. The
market impact reached as far as
Japan and Australia, where traders said local currencies followed the
Singapore dollar higher.
• Gold was down 70 cents to $933.30 amid cautious sentiment.
Wednesday 9th April 2008 Interbank GB POUNDS / EURO 1.2502 EURO / GB POUND 0.7998
Sterling hits records lows against the euro.
Pounds:
What a day for sterling yesterday as it saw record lows hit against the
euro, and another new level nearly
breached this morning.
Weaker than expected housing data weighed heavily
on sterling as it lost over one
cent against the euro from 1.2665 to 1.2542 and against the dollar we
saw a drop from $1.99 to $1.9686.
Consumer confidence in the UK, as measured by the Nationwide’s monthly
survey fell to another low in March
as the effects of the credit crunch and a weakening housing market took
their toll. Nationwide said its consumer
confidence ticked down another point to 77, although a weaker figure of
76 was expected. This has
piled even more pressure on the central bank to cut interest rates
tomorrow. Their two day meeting starts
today with the rate decision due at 12.00 tomorrow afternoon, with the
forecast for a 25 basis point cut.
Data at 9.30am: Industrial Production expected at 0.1% from –0.1%
previous.
Euros:
The euro benefited from sterling's bad day yesterday as
the single currency made a new high against the
pound with 0.7973 breached.
This morning we have seen the euro continue
its rally the key level of 0.80 has
now been hit. Against the dollar the euro is under a little light
pressure but still seems to be stuck in a range
around the $1.57 levels.
The markets are now waiting to see what happens
tomorrow with regards to interest
rates in the euro-zone but it is widely expected that the European
Central Bank will leaves rates unchanged at
4.00%.
Data at 10.00am: Euro-zone GDP expected at 0.4% unchanged from previous.
General Euro Currency News:
• The central Bank of Japan left its key interest rate unchanged at 0.5%
as expected. It said “Japan’s
economic growth is slowing, mainly due to high energy and raw material
prices”.
• The IMF said yesterday that the financial sector faces potential
losses of almost $1,000bn as a result of
the credit crises, warning of further losses and writedowns.
• Oil is up slightly to $108.73 per barrel ahead of the release of a US
government report to show gasoline
inventories fell last week.
Tuesday 8th April 2008 Interbank GB POUNDS / EURO 1.2542 EURO / GB POUND 0.7973
Credit crises hits UK high streets—expectations that worse
is still to come.
Pounds:
The pound has suffered again this morning on the back of a poor day for
sterling yesterday. We had already
seen the pound heading towards the 1.26 level yesterday, and this
morning the level has been breached as
the pound has dropped to 1.2572.
Against the dollar the pound is also
down with over half a cent lost to be
trading at $1.9789.
UK house prices experienced their largest monthly
decline in almost 16 years after HBOS
released data this morning. House prices fell by 2.5% from February and
were up just 1.1% from March
2007.
Most attention is now being drawn towards the central banks
meeting this Thursday. The Bank of England
is expected to cut interest rates 25 basis points to 5.0%.
There has
also been fears that the credit crunch
is hitting the high street as numbers of negative trading statements
from retailers is at its highest point in two
years amid widespread expectations that the worst is yet to come.
Data at 00.01am: Nationwide Consumer Confidence expected at 76.0 from
78.0 previous.
Euros:
.The euro climbed to a session high of $1.5799 against
the dollar after Greenspans comments regarding the
outlook for the dollar. We have also seen the euro hit 0.7955 this
morning as the interest rates decisions
seem to be pointing to a rate cut in the UK, whilst rates in the
euro-zone look to be left unchanged.
Analysts
said that the ECB is almost certain to keep rates steady at 4.00%, but
the usual anticipation surrounding the
following press conference will be watched very carefully. Any bearish
comments from ECB President jean-
Claude-Trichet may challenge any euro advance against the dollar in the
days ahead.
No data. ECB’s Constancio to speak at 12.30
General Euro Currency News:
• UK lenders withdraw no-deposit mortgages as the credit crises pushes
on. First time buyers with no
cash savings were shut out of the housing market on Monday after Abbey
became the last mainstream
lender to stop offering 100% mortgages.
• Oil prices jumped again yesterday by almost $3.00 per barrel to
$108.90 on the back of falling gasoline
supplies and expectations that US interest rates will fall further.
• Bank of Japan look likely to leave interest rates unchanged at 0.5%
Monday 7th April 2008 Interbank GB POUNDS / EURO 1.2675 EURO / GB POUND 0.7889
Key interest rate decisions this week in UK, Euro-zone and
Japan.
Pounds:
The pound benefited from the poor economic data from the US on Friday
and we saw a push through the
$2.00 level.
Sterling has fallen of slightly against the greenback to
$1.9843 and against the euro to 1.2679 as
the market digested the data and the prospect of a rate cut by the UK
central bank this week. The Bank of
England's Monetary Policy Committee meets this Thursday and is expected
to cut interest rates to 5.0% from
5.25%. Current elevated inflation pressures mean that the BoE still has
to tread very carefully but the increased
downside risk to the growth outlook warrant further preventative action
and a rate cut is looking
more likely.
No data today.
Euros:
.We saw a rally for the euro on Friday as it pushed
through the $1.57.00 level against the dollar after the payrolls
data was released. There has been a slight correction as it fell back
through that level to be trading
around $1.5641. Against the pound the single currency has continued to
gain in strength and we are seeing
0.7880 this morning.
In a quiet week for European data, attention will,
be focused on the European Central
Bank’s Governing Council meeting Thursday. Economists polled are
predicting the key interest rate to be left
on hold at 4.0%. With inflation reaching 3.5% in the euro area the ECB
is very likely to remain hawkish and
highly unlikely to move for a rate cut.
Data at 11.00am: Germanys Industrial Production expected at –0.4% from
1.8% previous.
General Euro Currency News:
• The central bank of Japan is expected to leave interest rates
unchanged at 0.5% when it meets this
week.
• Australia’s Feb trade deficit hit a record A$3.29B after a sharp drop
in resource exports caused by severe
weather conditions at key ports.
• Oil prices are continuing to push higher towards the $107.00 level. A
weaker dollar, tight energy supplies
and negative news on the US economy are the key drivers, price trading
around $106.75/barrel.
Friday 4th April 2008 Interbank GB POUNDS / EURO 1.2731 EURO / GB POUND 0.7854
Reuters poll in UK—48 out of 63 economists expect rate cut
in April.
Pounds:
Sterling initially weakened against a basket of currencies early
yesterday morning on the back of weak UK
PMI Services data. The headline figure dropped to 52.1 in March from
54.0 in February. Those early losses
were then clawed back as poor economic data from both the euro and US
markets brought the pound back to
gain back those early losses.
The pound saw a 0.4% gain against the
single currency as it broke back through
the 1.27 level, currently trading at 1.2731. Against the greenback we
saw a rally start from $1.9778 to
$1.9763 this morning.
Early this morning there was a survey showing that
the Prospect of an interest rate cut
next week had grown sharply after the Bank of England said the squeeze
on mortgages and corporate credit
was set to intensify. A rate cut from 5.25 per cent to 5 per cent is
widely expected as a reuters poll showed
48 out of 63 economist expect a ease in policy next week rather than
May.
No data today.
Euros:
The euro had a bad end to the weak after the Euro-zone
retails sales data was released. The figures showed
an unexpected drop in February as sales of food, drink, tobacco and
non-food products fell. The volume
dropped .05% m/m and 0.2% for the year. They were expected to rise 0.2%
on the month and flat for the
year.
The continuing crises in the banking sector looked to Germany for
the next trench of subprime mortgage
losses. Germanys second biggest state-owned bank BayernLB reported
writedowns of €4.3B as a result
of the US housing market crises.
Data at 11.00am: German Factory Orders expected at 03.8% from –1.5%
previous.
General Euro Currency News:
• International banks are scrambling to sell their holdings of
Spanish
mortgage debt at a steep discount,
fearing that the country may be sliding into the worst economic downturn
in its modern history.
• Oil and gold are pretty much unchanged with oil slightly down at
$104.12 per barrel and gold at $903
per troy ounce.
• Investors are cautiously looking to get back into carry trades as the
yen is sold off to buy into higher
yielding currencies such as the Aussie dollar and Rand.
Thursday 3rd April 2008 Interbank GB POUNDS / EURO 1.2692 EURO / GB POUND 0.7879
MPC member says BoE will need cut interest rates gradually
in UK
Pounds:
Sterling is up this morning against the dollar after Bernanke testified
before the joint economic committee in
the US.
Against the euro we have been stuck around the 1.26 levels for
the last few days as the pound has
struggled to break through the 1.27 level. The pound may have found some
support on comments by MPC
members with regards to future interest rate cuts. The UK’s central bank
executive director for markets said
‘The bank of England will need to cut interest rates gradually, probably
allowing some slack to develop in the
economy, if it is to reach its inflation target in the medium term.
Paul
Tucker, a member of the banks rate setting
Monetary Policy Committee, said there is a risk that demand would slow
considerably due to tighter
credit conditions, posing a meaningful downside threat to inflation.
Data at 9.30am: Purchasing manager Index Services expected at 53.3 from
54.0 previous.
Euros:
The euro is back on the defensive this morning after it
benefited from movements in the dollar. We saw a
slight gain against the greenback but not as much as investors were
expecting.
The single currency seems
stuck in a range at present, but with key economic data due today and tomorrow, both sides of the Atlantic,
we may have a clearer picture for where the eur/usd may go.
Data at 10.00am: Euro-zone Retail Sales expected at 0.2% from 0.4%
previous.
ECB’s Trichet to speak at 11.30 in Berlin.
General Euro Currency News:
• The rand has found strength on the back of a bounce in equity markets.
• There seems to be more interest in carry trades as investors flow back
into higher yielding currencies
such as the Aussie dollar and Rand. The yen has weakened off slightly
against the dollar and sterling.
• Oil gained over $4 yesterday on the back of a larger than expected
decline in US gasoline stockpiles.
• Spot gold is down $1.10 per troy ounce at $902.90.
Wednesday 2nd April 2008 Interbank GB POUNDS / EURO 1.2685 EURO / GB POUND 0.7883
First Direct suspends mortgage lending to new customers in
UK.
Pounds:
The pound benefited from a surprise off day for the euro yesterday as
sterling at last saw some gains against
the single currency. At its lowest point, the pound was trading at
1.2530 against the euro but then gained
back over 1 and half cents to hit 1.27 this morning. The move seemed to
be linked to the strength in the dollar
as it pulled back against the single currency.
Comments by the Bank of
England Governor Mervyn King
regarding inflation worries also seemed to buoy the pound as an interest
rate cut next week seemed to be put
on hold.
Data at 9.30am: Mortgage Approvals, Purchasing Managers Index and BoE
Housing Equity Withdrawal.
Euros:
The euro seems slightly vulnerable still this morning
after its losses yesterday against the dollar, likely to
trade in a range of $1.5550 to $1.5650.
Yesterday the single currency
was a fraction off its all time high
against the greenback before the dollar rally began. At one point, the
euro fell to $1.5563 before fighting back
to be trading around $1.56 this morning.
Strong economic data from the
US helped the dollars position
against the euro, with more key economic data due out of the US today.
Looking ahead, the euro still seems
under pressure from the dollar, should the data from the US be dollar
positive.
The Data concerning losses
from Swiss banking giant UBS was also a major factor in the euros
decline.
Data at 10.00: Euro-zone Producer Price Index expected at 5.2% from 4.9%
previous.
General Euro Currency News:
• Australian dollar declines slightly after Reserve Bank of Australia
leaves interest rates unchanged at
7.25%
• First Direct has suspended mortgage lending to new customers after
being swamped by applications
following moves by rival banks to pull similar mortgage deals because of
worsening conditions in the
money markets.
• Oil is slightly down from yesterday at $101.19 per barrel, gold is
$1.60 up at $885.10 per troy ounce.
Tuesday 1st April 2008 Interbank GB POUNDS / EURO 1.2688 EURO / GB POUND 0.7882
BoE Governor dampens hopes of rate cut on rising inflation
fears.
Pounds:
The pound had a bad day against the euro yesterday as it hit new record
lows. We saw sterling fall to 1.2530, a 16% drop since July 2007.
Economic data from the Euro zone put any chance of an interest rate cut
by the ECB firmly at the back of the queue.
Against the dollar the pound
also fell, by just over 1 cent from 1.9958 to 1.9832. Reports from the
Governor of the Bank of England that hopes of a cut in interest rates as
soon as next week may have been dampened, after he issued a renewed
warning yesterday that Britain’s central bank must take a hard line to
ensure that present high levels of inflation are quelled.
The pound has
rallied slightly
this morning against the euro after this report and the news of problems
with Swiss banking giant—UBS.
Data at 8.30am: Purchasing Managers Index Manufacturing expected at 51.0
from 51.3 previous.
Euros:
Euro zone inflation hit 3.5% yesterday, higher than the
3.3% expected and way above the ECB’s target rate
of below but close to 2%. This put any talk of a possible interest rate
cut by the European Central Bank firmly at the back of the queue and the
euro rallied on the back of this.
The single currency hit an all time
high of 0.7980 against the pound, just of the key resistance level of
0.80. Against the dollar the euro hit €1.5813, just of its all time high
of €1.5857. However, this morning the euro has plummeted against the
dollar and yen after beleaguered Swiss banking giant UBS AG reported
CHF12 billion in losses and $19 billion in subprimemortgage
–related writedowns for the first quarter.
This news knocked the euro
down more than over half a
cent against the dollar and also saw losses against the yen and pound.
This morning we have seen German
Retail Sales fall to –1.6% from an expectation of +0.6%.
Data at 9.00am: Euro-zone Unemployment Rate expected at 7.1% unchanged.
General Euro Currency News:
• Swiss banking giant UBS AG reports losses of CHF12B and $19B in
subprime writedowns.
• In Japan, sentiment among large manufacturers, the backbone of Japan’s
economy, sank to its lowest
level in four years in March, heightening market expectations for an
interest-rate cut.
• Oil prices are trading around $102 after falling more than four
dollars on concerns about slowing energy
demand in the US and a decline in Iraqi militia violence. Current price
is $101.40 per barrel.
• Australia’s central bank leaves target cash rate unchanged at 7.25
percent.
