Euro Pounds Currency Brief January 2008

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Thursday 31st January 2008 Interbank
GB POUNDS / EURO  1.3400
EURO / GB POUND 0.7477


UK house prices fall for third straight month.

Pounds:

UK house price data for January fell for the third straight month while the year on year gain was the lowest since Dec 2005, the Nationwide Building Society said today. This on the back of the Bank of England saying that new mortgage approvals fell to 73k in December from 181k in November, the lowest level since the central bank began collecting the data in 1999, gives the outlook that the market will remain week. Will this be enough to convince the BoE to cut interest rates next month?

The pound has weakened against basket of currencies today and we have a red board for sterling all except the Rand.

Data at 10.30am: GfK Consumer Confidence Survey expected at –15 from –14


Euros:

The euro shot up yesterday to a two week high against the dollar, within reach of its lifetime record, after the Fed voted to cut its rates. The euro passed $1.49, a key technical barrier, just more than a half cent shy of its all time high of $1.4968 reached last November. The single currency also gained against sterling, rising 0.7% to 0.7470. German Retail Sales data released this morning has shown a fall for the month of December contrary to expectations. Retail sales fell by 0.1% on the month and were down 6.9% on the year, after economists forecast a 1.7% rise on the month.

Data at 10.00am: Eurozone Unemployment rate expected at 7.10% from 7.2%


General Euro Currency News:

• The Rand continued to weaken off yesterday as news that South Africa has got its power supplies nearly back to fall capacity seems to have fallen on deaf ears. There are reports that rationing power to customers may start as early as March, proving the situation is not going to be sorted out any time soon.

• Oil prices slid more than $1 after economic uncertainty and a report that US crude stock piles rose.

• Gold fell slightly yesterday after the Feds rate cut, now trading at $925.00 per troy ounce
 

 

Wednesday 30th January 2008 Interbank
GB POUNDS / EURO  1.3469
EURO / GB POUND 0.7427


Better than expected UK data casts doubt over rate cut by Bank of England

 

Pounds:

Doubt was cast further yesterday to a rate cut by the BoE next month, after better than expected economic data was released. CBI Distributive Trades Reported Sales volumes in January were stronger than expected and a rise in expectations for sales in February suggested there might be some short term stability. This gave the pound a boost as it broke through $1.99 for the first time this year rising to $1.9929. The pound also rose 0.3 % against the euro to €1.3464. However, at least one Monetary Policy Committee member ‘Danny Blanchflower’ has warned that although there are upside risks to inflation there are greater risks to downside activity.

Data: Mortgage Approvals at 10.30am expected at 79k from 83k previous


Euros:

Not to much going on with the euro at present as it is being overshadowed by what's happening with other major currencies. It is still under pressure from the yen but has moved up slightly against the dollar, as the US currency waits to see what happens with the Fed’ decision later today.

The fall out from the scandal at Societe Generale looks set to continue as it calls in auditors to examine events leading up to the record loss by its rogue trader Jerome Kerviel.

Data at 9.00am: Bloomberg German Retail PMI


General Euro Currency News:

• The loonie (Canadian dollar) made gains against its US counterpart yesterday as it broke through parity.
The loonie is riding high on the back of a strong rally in the commodities markets.

• Yen gained yesterday as investors repatriated gains from the redemption of euro denominated bonds • Gold and platinum hit record levels for a third successive session as mining companies in South Africa looked like they had just about got their power supply back up and running.

 

 

Tuesday 29th January 2008 Interbank
GB POUNDS / EURO  1.3453
EURO / GB POUND 0.7434


Homes in UK sold at auction soar to levels last seen in 90’s house crash.

 

Pounds:

.Further problems with the housing market in the UK emerged as one of the leading property auctioneers ‘Allsop’ reported the number of repossessed homes being sold at auction has soared to levels last seen in the 1990’s house price crash. It says that nearly 40% of all the homes it was currently putting under the hammer were properties that were being sold by banks and building societies that had repossessed them. However, the Bank of England are still giving the message that it will cut interest rates only gradually as it carries out a difficult balancing act of trying to support growth while containing underlying inflation.

The pound was up against the dollar yesterday by just over half a cent trading at $1.9856

Data: CBI Distributive Trades Report at midday


Euros:

The euro is lower against the yen on speculation that Japanese investors may convert euro into yen after the redemption of euro-denominated bonds on Jan 31st., which some market players estimate will be worth as much as €20 billion. With regards to where interest rates are going in the eurozone, the ECB has the most acute political dilemma among the worlds major central banks as the two halves of the eurozone system are pulling apart, but they do face the same tricky task of judging whether the key risk is now inflation or a slump.


General Euro Currency News:

• Private investors withdrew the highest ever amounts from investment funds last month and switched into lower risk savings a report in the FT said this morning.

• Continuing electricity shortages are hurting the South African economy. Delayed investment plans mean the country is not expected to be back in a comfortable surplus position until 2012.

• Gold and platinum hit record levels as the mining industry in South Africa struggled with power shortages.
Gold is now trading at $929.20 per troy ounce and platinum is at $1,720 a troy ounce.

 

 

Monday 28th January 2008 Interbank
GB POUNDS / EURO  1.3463
EURO / GB POUND 0.7441


MPC’s Blanchflower says UK interest rates very restrictive for growth.

 

Pounds:

.An interview in the Guardian with Monetary Policy Committee member, Danny Blanchflower was quoted as saying the present level of interest rates in the UK is restrictive for the economy and should be cut to ward off looming risks for the economy stemming from a likely slowdown in the US. He stated that evidence from the UK housing market was worrying and also noted the low level of consumer confidence in the UK.

A survey by Hometrack showed that UK house prices did fall for the fourth straight month in January as buyers delayed making purchases until the outlook for the economy and interest rates became more clear.

No data today.


Euros:

The euro is slightly lower against the yen today and against the dollar it is also lower but in a tight range. If stocks remain sluggish, advances in the euro against the yen will remain limited, which in turn, could hamper rises in the euro versus the dollar.

Risk aversion will this week also play a key roll in the way the currencies move.

No data today.

ECB’s Liikanen, trumpel-Gugerell & Hurley to speak today


General Euro Currency News:

• The South African currency weakened on Friday as continued widespread power cuts have been acknowledged by the government as hurting the economy.

• Sunday Times reports of an in house survival plan prepared by the board of the mortgage lender includes a sale of new shares worth around £1.3 billion.

• Gold rallied as fresh buying pushed the price to $920.60 per troy ounce.

 

Friday 25th January 2008 Interbank
GB POUNDS / EURO  1.3503
EURO / GB POUND 0.7441


Euro rallies Bullish comments by ECB member & good economic data.

 

Pounds:

The number of mortgages granted to new home buyers plunged to a record low last month as banks struggled with the credit crunch and potential buyers hesitated in the face of higher mortgage rates. The number of approved mortgages for new buyers were lower than at any time since records began in September 1997, figures from the BBA showed. The news, which will add to pressure for a base rate cut, comes as more high street banks move to increase rates on popular tracker mortgages, penalising borrowers hoping to benefit from future reductions.

Yesterday the pound only seemed to benefit as their was big moves in the strength of the dollar and Yen, with a gain in over 2% against the dollar and 2.5% against the Yen respectively.

No data today.


Euros:

A surprise rise in German IFO index and comments made by a member of ECB’s governing council helped push the Euro up against a basket of currencies yesterday. The IFO index rose from 103 last month to 103.4 in January, above the 102.3 level expected.

Comments made by Germany’s Axel Weber dismissed speculation that the ECB had discussed cutting interest rates at its last meeting, reiterating that rising inflation remained the ECB’s primary concern.

The euro rose 0.5% against the dollar to $1.4715 and 0.5% against the Yen to Y156.95.

Data 8.10am: German GfK Consumer Confidence expected at 4.3 from 4.5 previous


General Euro Currency News:


• Investors seemed to take the news of a slight equity rally yesterday to venture back into the carry trade. We saw the Yen weaken against the pound, dollar and euro as the appetite for risk was back on. However, this may be short-lived as the equity rally seemed to be driven by the monocline rescue package.

• Societe Generals scandal of a loss of €5bn became the biggest loss by a single trader, over shadowing Sumitomo & Barings of the 1990’s

• Commodity markets rallied yesterday with Gold and oil rising, benefiting from dollar weakness.

 

Thursday 24th January 2008 Interbank
GB POUNDS / EURO  1.3400
EURO / GB POUND 0.7478


Bank of England minutes reveal 8-1 vote in favour of keeping rates on hold.

 

Pounds:

Minutes released by the Monetary Policy Committee revealed the vote to leave interest rates unchanged was
8 - 1 in favour and this suggests the BoE was not ready to follow the Fed with it’s aggressive approach on cutting interest rates. The BoE’s Governor Mervyn King said ‘To Put it bluntly, this year we are probably facing a period of above-target inflation and a marked slowing in growth.’ This has lead analyst to the conclusion that the door is open to a rate cut at the Feb meeting, but suggesting that because of inflation worries  easing will be far more gradual than the Fed.

Data at 9.30am: BBA Loans for House Purchase


Euros:

Jean-Claude Trichet, president of the 15 nation European Central Bank, gave no indication of any rate easing during a speech on Wednesday, even as data showed services sector output dropping to the worst levels in more than four years. The eurozone Purchasing managers Index fell from 53.3 last month to 52.7 in January.
Analysts think it may be just a matter of time before continuing poor economic date may change the view of possible rate cuts by the ECB.

Data at 9.00am: German IFO expected at 102.3 from 103 previous,


General Euro Currency News:


• News of a possible government brokered rescue plan for credit insurers helped US stocks stage a late rally. This seems to have helped more than the Feds emergency rate cut earlier this week.

• The Yen rallied sharply yesterday hitting its strongest level for 2.5 years against the dollar as risk aversion continued to grip the currency markets. The Swiss Franc also benefited from the flight to safety

• Societe Generale said a trading incident will result in a €4.9B loss, along with a write down of €2.05B in assets relating to subprime exposure, leading it to do a capital hike of €5.5B in the following weeks

 

 

Wednesday 23nd January 2008 Interbank
GB POUNDS / EURO  1.3497
EURO / GB POUND 0.7461


Bank of England Governor Mervyn King says UK is facing a period of above target inflation and a marked slowing in growth.

 

Pounds:

The Bank of England sounded a stark warning last night that the economy faced its most testing period for a decade and that the persistent danger of inflation left it boxed-in over potential action to starve off a severe downturn. Mervyn King, the BoE Governor said that the bank rate of 5.5% is probably bearing down on demand, suggesting the BoE will continue to cut its bank rate, but cautiously. A BoE spokesperson also said the central bank had no plans to bring forward the next meeting of its monetary Policy Committee, due on Feb 6- 7.

Sterling moved up slightly against the dollar yesterday, really on the back of the Fed’s cut in interest rates but remained trading around similar levels against the Euro.

Data today at 9.30am: BoE Minutes and GDP Quarter on Quarter expected at 0.5% from 0.7%


Euros:

The Euro recovered ground against the dollar yesterday, reversing earlier declines after the Fed announced its emergency inter-meeting rate cut. ECB officials said while pressure is growing on the European Central Bank to soften its hawkish stance soon, they repeated warnings about inflation, especially from wages.

Data today at 9.00am: Euro-Zone PMI Services expected at 52.1 from 53.1 previous month. Industrial Orders at 10.00am expected at 1.25% from 2.5% previous.


General Euro Currency News:


• The Bank of Canada cut interest rates yesterday by 25 basis points to 4.00%. There were rumours that they may have gone for a 50 basis point cut after the fed’s aggressive shock rate cut.

• Oil prices held steady despite the Federal Reserves surprise rate cut. Price per barrel is currently at
$89.30

• Gold was down $2.00 and now at $887.75 per troy ounce.
 

 

Tuesday 22nd January 2008 Interbank
GB POUNDS / EURO  1.3497

Global equities plunge 38 of worlds indicies in bearish market

 

Pounds:

Data released yesterday showed the UK’s public sector borrowing had risen more than expected, producing the largest December deficit since records began. This on the back of falling house prices in January and the global financial turmoil has weakened Sterling against a basket of currencies. This has put the pressure back on the Bank of England to reduce rates when they meet next month, for a rate cut .

The pound is trading at its weakest level against the Dollar in 10 months, currently at $1.9462

Data today at 11.00am: CBI Quarterly Industrial Trends


Euros:

The Euro is lower against the Dollar and Yen this morning, dropping below the $1.44 level against the dollar, the first time since December, on selling prompted by concerns about the eurozone economy.

Speculation is circulating that the European Central Bank will cut rates soon. Support is put at $1.4350. It seems clients have sold currencies against the Yen in anticipation of more Wall Street losses later today.

No data today.


General Euro Currency News:


• All the worlds most important equity indicies have fallen by at least 10%, with 38 of the worlds indicies now in a bearish market. Analysts at Danske Bank have said that if the incoming data over the coming weeks confirm that the US has sunk into a recession, then equities may still have some way to fall.

• Oil prices fell further overnight on mounting concerns that the US economy may be heading into a recession that would likely reduce crude demand. Oil has dropped 4% and is trading at $86.55 per barrel.

• Japans central bank voted unanimously to leave its benchmark interest rate unchanged at 0.5%.

 

Monday 21st January 2008 Interbank
GB POUNDS / EURO  1.3427

UK house prices fall by 0.8% in January—price survey from Rightmove

 

Pounds:

UK house prices fell by 0.8% in January, but Rightmove noted some signs that the market is beginning to recover. It noted that prices seemed to be stabilising and attributed the monthly fall in January to the large number of smaller properties coming onto the market in order to avoid the implementation of HIPS (Home Improvement packs). It also reported an active start to the year as buyer interest picked up on the back of lower prices and easing interest rates.

The pound is still trading low this morning, down against the Euro and Dollar.Data at 9.30am: Public Finances expected at 14.1B from 8.9B, Public sector borrowing expected at 7.1B from 11.2B previous, M4 Sterling lending expected at 14.5B from 16.5B and BSA Mortgage Approvals.


Euros:

The Euro is on the defensive today against the Dollar and Yen, as concerns continue to mount about the outlook for the eurozone economy. ECB member Nout Wellink on Sunday was quoted as saying that economic growth will be closer to 1.5% than 2% this year. His comments illustrate the growing public division between the doves and the hawks at the ECB. Nout Wellink said it is inevitable that the credit crises in the US will have an affect on the global economy.

’The United States has a very big economy. We will be affected’

Data at 8.00am: German producer Prices expected at 0.2% from 0.8% previous.


General Euro Currency News:


• The world economic forum ‘Davos’ which starts on Wednesday this week looks likely to have ‘Economic uncertainty’ at the top of its agenda.
• Oil prices rose amid expectations that OPEC will resist pressure from the United States, the worlds largest energy consumer, to raise crude production levels. Nymex crude added 30 cents to set the cost per barrel at $90.87 • Equity markets take a battering this morning, Dax down just under 3%, FTSE 100 approaching 5700

 

Friday 18th January 2008 Interbank
GB POUNDS / EURO  1.3433

Sterling gains as inflation pressures on Bank of England threaten rate cut in Feb

 

Pounds:

Rising inflation may prevent the Bank of England from cutting rates as fast as it had intended, it’s deputy governor has warned. Is seems that higher energy and food prices are threatening to make a rate reduction difficult, although the growing disruption in global credit markets and in the UK’s own banking system is proving that the bank is between a rock and a hard place. At present, it still seems analysts are calling for a rate cut next month.

Data at 9.30am: Retail Sales expected at 0.2% from 0.4% previous


Euros:

The Euro has had a few choppy days lately as comments from various members of the ECB’s governing council have been made, then seemingly withdrawn. Yesterday the ECB’s Mersch seemd to backtrack on his comments that the ECB has not considered a cut in rates at its last meeting. Some analysts suspect this to be a bluff aimed at wage setters to prevent second round inflationary effects appearing in the eurozone.

Data at 10.00am: Italian Trade Balance expected at –432.5M from 388M previous.


General Euro Currency News:


• Merrill Lynch released more poor data yesterday as it reported a quarterly net loss of $9.8bn.

• Oil fell 71cents yesterday to close at $90.13 per barrel
.
• Gold was still trading under the $900 level yesterday
 closing at $886.35

 • Its Friday, have a good weekend

 

Thursday 17th January 2008 Interbank
GB POUNDS / EURO  1.3449

Sterling gains against Euro by over 1.5%

UK unemployment benefit falls in UK to lowest level in 30 years
 

 

Pounds:

Strong earnings and jobless data released from the UK have raised a question mark over whether interest rates will be cut.

The number of people claiming unemployment benefit fell to its lowest level for more than 30 years, while British average earnings unexpectedly rose in the three months to November. This gave the pound a welcome boost yesterday as it rose 0.1% against the dollar to $1.9630 and up against the Euro by 1.1% at 1.3394. This will now put more pressure on the bank of England as to which way they should turn.Inflation pressures may be pulling back the chances of a rate cut in February.

No data today
 


Euros:

The Euro had a bad day yesterday as it weakened off across the board. Comments from ECB policy maker Yves Mersch suggested ‘There will be a moderation of growth inside Europe’. He is often seen as a hawkish voice on the governing council, Mr Mersch said the 15 nation bloc should grow ‘below’ its trend of about 2% this year. This is seen as a first signal that the ECB’s current hawkish stance may shift over the next few months. The euro was 1 % lower against the dollar at $1.4655, down 0.3% against the yen at Y157.6 and 1.1% down against sterling at £0.7466.

Data at 10.00am: Euro-zone trade balance expected at 5.5B from 6.1B previous. ECB’s Trichet to speak today
 


General Euro Currency News:

• The bank of Japan may be forced to intervene as the rise of the Yen shows no signs of stalling. The Yen has strengthened against a basket of currencies as it rides on the back of falls not just in higher yielding currencies and equities, but also in metals and emerging market stocks.

• Recession fears sparked widespread selling across the market as oil dropped $1.06 per barrel to stand at $90.84. Crude stocks also rose 4.3m barrels last week, well above market consensus of 0.6m.

• Gold fell under the $900 level yesterday as pressure from weakness in oil markets and a rebound in the dollar drove it to $874.20 per troy ounce.
 

 

 

Wednesday 16th January 2008 Interbank
GB POUNDS / EURO  1.3400

Sterling takes a breath as Consumer Price Inflation rose 0.6% in Dec

 

Pounds:

Sterling took a breather yesterday as UK Consumer Price Inflation rose 0.6% last month which was just ahead of forecasts, leaving the annual rate at 2.1 per cent, just above the BoE’s 2 per cent target. The pound rose against both the Euro and Dollar, but hold onto your hats, analysts are still expecting the BoE to cut rates next month by 25 basis points.

Confidence in the UK housing market has hit its lowest level since the housing crash of the 1990’s according to an authoritative survey of estate agents. The Rics Royal Institute of Chartered Surveyors revealed the gloomiest figures since November 1992, this survey has proved a reliable early guide to movements in the housing market in recent years.

Data today 9.30am:Jobless Claims expected at –5.0k from –11.1k last month & Unemployment expected no change from 5.3% last month.


Euros:

The Eurozone doesn’t seem to have escaped the global financial slowdown as the German ZEW figures came in at their lowest level in 15 years yesterday. Bear Sterns David Brown European Economist said ‘Unless the ECB wakes up pretty soon to easing monetary policy, the Eurozone could be paying the price with much weaker growth this year.

Data today at 10.00am: Eurozone Consumer Price Index expected no change from last month at 3.1%

General Euro Currency News:

• Both Citigroup and Merrill Lynch released data yesterday showing they were hit hard by the sub prime crises, with Citibank alone announcing a write-down of $18 billion.

• The yen rose to a 2 and a half year high against the dollar as the carry trade was shunned as a flight to safety. The Bank of Japan also admitted the economy was slowing, reducing the chances of a rate rise.

• Oil fell back yesterday amid concerns that slowing US growth could hit demand. The price per barrel is now at $91.90 • Base metal prices also receded yesterday over possibility of US recession, gold trading at $909.40

 

 

Tuesday 15th January 2008 Interbank
GB POUNDS / EURO  1.3243

Rising costs on fuel and food prices heaps inflationary pressure on Bank of England

 

Pounds:

Worrying rises in fuel and food prices are putting inflationary pressures on the BoE with regards to potential rate cuts. Producers have raised food prices by 7.4% this year and output prices for petroleum products have gone up more than 20%. This could limit the banks scope for easing monetary policy over the next year, however the markets still expect a rate cut next month.

Sterling continued its fall yesterday as it seemed to mirror image the fall of the dollar back end of last year. Even data showing Producer Price Inflation had risen to its highest level in 16 years couldn’t halt the pound from dropping to a record low against the Euro as it hit £0.7608 (1.3144)

Data today at 9.30am: Consumer Price Index expected at 0.5% from 0.3% previous, Core Consumer Price Index expected 1.5% from 1.4% previous


Euros:

The Euro was the major benefactor yesterday as it hit record highs against the dollar and was trading at near highs against the pound. In a meeting yesterday, the ECB President ‘Trichet’ said this was no time to be soft on inflation, and warned that workers must not bid-up wages or companies raise prices. He said he still expects growth this year to be around 2%.

Data today at 10.00am: ZEW Survey expected at –38.0 from –35.7 previous

General Euro Currency News:

• Every cloud has a silver lining as rise of the precious metal hit its highest level in 27 years. The metal seems to be riding in the slipstream of gold as it also hit new highs and broke through the $900 level.

• Aussie dollar has another good day as a survey showed Australian job adverts rose to record levels in December. A recent run of strong data may heighten expectations of a rate rise and strong dollar.

• There is talk of substantial write off’s from some of Wall Streets biggest investment banks including Citibank and Merrill Lynch with regards to the continuing subprime mortgage crises.

• Oil rose by more than $1 per barrel to $94.20 yesterday as concerns about supplies from Nigeria following further violence . Militants attacked an oil tanker on Friday, the second attack in a week.

 

Monday 14th January 2008 Interbank
GB POUNDS / EURO  1.3202

Reports in the Times suggests sterling to continue slide in 2008

 

Pounds:

Reported in the Times on Sunday, the city's top professionals are calling sterling to continue its slide in 2008 making it one of the least attractive markets to invest in. Goldman Sachs Jim O’Neil, chief economist believes sterling could drop as low as 81p against the Euro (1.2345) - another 7% fall. Deutsche Bank and Merrill Lynch are both calling sterling to be around 76p against the Euro for next January. So the outlook is not good.

The BoE are expected to cut interest rates twice this year to 5% or lower to prop up the ailing economy despite keeping them on hold last week. All sides believe the bank to drop rates next month.

Data: Producer Price Index output due at 9.30am at 0.4% mom from 0.5% previous. Also DCLG UK House Prices expected at 10.5% from 11.3% previous.


Euros:

The Euro continued it’s strengthening on Friday as it tipped towards $1.49 against the Dollar and broke a key barrier of 75p against sterling.

Last week saw a second month of strong factory orders and German retail sales are expected to recover most of the October dip.

France’s Current Account came out at –3.6B this morning, it was expected at –2.7B Data: Industrial Production due at 9.30am expected at _0.8% from 0.4% previous.

General Euro Currency News:

• Oil weakens as expectations of a US economic slowdown kicks in. The President’s comments over the weekend calling Iran, Opec’s second-largest producer, ‘the worlds leading state sponsor of terror’ didn’t help matters. Current price is $93.16 per barrel.

• There are risks of above-expected Swiss inflation that would increase pressure on the Swiss National Bank to hike interest rates.

• Gold hits $898.60 but has cooled of slightly, one trader attributing this to a national holiday in Japan.

 

Friday 11th January 2008 Interbank
GB POUNDS / EURO  1.3206

BoE keeps rates on hold, but markets have priced in drop next month

 

Pounds:

The BoE left rates unchanged at 5.5% yesterday.

It seems the banks survey of quoted mortgage rates at end of Dec showed the mortgage companies are not passing on the full rate reductions. The markets do however seem to have priced in a rate reduction pointing to next month for the move. It seems not even Alistair Darling, the chancellor, could push the Bank of England to reduce rates, as George Osbourne, Shadow chancellor said ‘I hoped he had learnt his lesson not to try to influence the bank’’ The bank have to think about inflation and the rapid easing on rates may hurt its targets, as pressures from the spike in oil, rises in domestic tariffs and also the slide in sterling will have an influence. Although, the slide in sterling may be helping could be seen as an effective easing in monetary conditions.

Data: Industrial Production at 9.30am due at 0.1% from 0.4% previous.


Euros:

The ECB kept rates on hold yesterday at 4% as expected, but the main focus as usual was on the news conference afterwards. The Feds Bernanke stated the central bank remained prepared ‘to act pre-emptively’ to prevent inflationary risk materialising in the eurozone. This indicates that out of the three choices available on where to go for interest rates, a rate reduction is more or less taken out of the equation. The Euro strengthened on the back of this yesterday rising to all time highs against sterling at 0.7536. Against the dollar the Euro rose to $1.48.

No data out today

General Euro Currency News:

• The Bank of America has been linked to buying Countrywide—the troubled mortgage lender which boosted Wall Street stocks.

• The Canadian dollar weakened yesterday on the back of weaker than expected Domestic Building Permits.

• Gold had another good day as it rose 2 per cent to a new record high of $894.90. Gold usually benefits in times of financial market turmoil and this combined with more investor interest from China shows no signs of letting up.

 

Thursday 10th January 2008 Interbank
GB POUNDS / EURO  1.3337

Bank of England rate decision at 12.00—To close to call

Sterling hits its weakest level ever against the Euro


Pounds:

The retail sector weighed heavily on sterling yesterday as M & S released its sales figures which came in worse than feared. This combined with poor Nationwide consumer confidence data dragged the pound down as sterling dropped to its weakest point against the Euro since the single currencies introduction in 1999.

The rate decision seems too close to call as the pressure mounts on the Bank of England to cut rates. It now seems a 50/50 split if the bank will cut rates by 25 basis points, but if they leave on hold, it seems a foregone conclusion they will come down next month.

Data today: Trade balance due at 9.30am and BoE rate announcement due at 12.00


Euros:

Outlook for the ECB seems to be unanimous that the ECB will leave interest rates on hold at 4.per cent for a seventh successive month. As usual the markets will be looking for Trichet’s press briefing which is expected to be quite similar to last month.

The Eurozone GDP growth in 3Q was unexpectedly revised up a notch, suggesting the eurozone has more momentum in reserve than soft data of recent months would imply.

Data today: ECB rate decision at 12.45 followed by Trichet’s press conference at 1.30pm

General Euro Currency News:

• The Shanghai futures market opened yesterday and had a positive impact on gold as the commodity again made records highs, reaching $891.40. The opening of Shanghai futures market opens up access to China as investors anticipate a wave of investment.

• Australian retail sales figures came in higher than expected in November and have given a boost to the Aussie dollar showing strength in the economy. This raises expectations of a rate rise in February to 7 per cent.

• Oil eases back to $94.37 per barrel as it falls $1.17

 

Wednesday 9th January 2008 Interbank
GB POUNDS / EURO  1.3379
Halifax Index shows UK house prices rise in December


Pounds:

House prices were shown to rise for the first time in three months yesterday according to the Halifax Index. This was unexpected and doesn’t necessary mean an end to the recent fall. Maybe something to focus on more would be the fact prices in the fourth quarter of 2007 were 0.8% below their levels in the third quarter.

Alastair Darling, the chancellor seemed to put more pressure on the BoE yesterday to reduce interest rates, by saying the bank ‘has room for manoeuvre’ with interest rates. It is still a close call as to which way the bank will go with rates. If they do decide to hold this month, then it seems a forgone conclusion they will reduce them in February.

Data today: Leading Indicator index at 3.30pm.


Euros:

There was mixed data from the eurozone yesterday and today with German factory orders coming in stronger than expected yesterday, and retail sales coming in this morning weaker.

The Euro is still strong against the Dollar this morning keeping above $1.47. Against Sterling, the Euro is heading towards 0.75 which would be a high since the Euro came into existence.

No data today

General Euro Currency News:

• The Aussie dollar gained in strength yesterday as housing data came out stronger than expected. This may prolong the interest rate rise cycle and a rate rise to 7% may be looming • Gold prices carried on it’s march yesterday as investors continued to flock to the safe haven as a hedge against the against the weakening US economy.

• There were fears of an attack on a Nigerian oil facility yesterday as oil gained $1.24 to finish at $96.33 per barrel

 

Tuesday 8th January 2008 Interbank
GB POUNDS / EURO  1.3463
BRC Retail Sales weaker than expected


Pounds:

The BoE was put under pressure again as the BRC Retail Sales figures released at Midnight were weaker than expected. The retails sales sector have not had a good Christmas and this will only increase speculation about a possible rate cut on Thursday. The rate decision will be a close call. There has not been a back to back move in interest rates since June 2004, and some say a rate move the first month in January won’t happen. But the markets were badly wrong footed this time last year by a surprise January rate rise.

The pound is still weak against the Euro and Dollar this morning. We are only just off the record low of £0.7493 against the Euro, currently trading at £0.7423 and $1.9791 against the Dollar.

No data out today


Euros:

The ECB is expected to leave rates on hold this week. Trichet said ’With the Credit markets still in the grip of the US debt crises, and early signs of slowing economies in parts of Europe’, leaving rates at 4.0% looks the likely outcome.

The Euro is still making strong gains against Sterling and the Dollar and after it hit a record high against sterling on Friday, there doesn’t seem to be any signs of slowing down.

Data out today is Eurozone Retail Sales due at 10.00am expected at 0.5% from –0.7% previous month. Also German factory orders due at 11.00am

General Euro Currency News:

• Oil prices fell yesterday from $98.40 per barrel, down $2.82 to $95.09 after temperature forecasts well above seasonal average in US north east this week.

• Foreign money staying away from Japanese stock markets—lowest level since 2002.

• Sales in the UK commercial property market nosedived in the fourth quarter of last year, which again is a knock on effect of the current credit crises, showing that it is reaching all areas.
 


Monday 7th January 2008 Interbank
GB POUNDS / EURO  1.3411
BoE under pressure this weak to reduce interest rates


Pounds:

This week the Bank of England will face one of its biggest dilemmas in more than 10 years of independence. Its under pressure from all sides to cut interest rates when the MPC meet on Thursday. This is despite inflationary warning signals from rising energy prices and signs of higher pay settlements. Both the Chambers of Commerce and the Engineering Employers Federation urge the Bank not to delay a further cut. A 25 basis point cut is the likely but 2 members of the Shadow Monetary policy Committee are predicting a 50 basis point cut.

No data out today.


Euros:

The ECB will be holding steady and will be prepared to act if necessary to contain increased inflationary pressure, ECB President Jean-Claude Trichet reiterated yesterday. Trichet also cover old ground on the outlook for the eurozone economy, repeating that its fundamentals remain sound, even if growth is set to cool this year.

Data out today will be PPI due at 10.00am expected to be 0.7% from 0.6% previous month and unemployment rate expected at 7.2% which was same as last month.

General Euro Currency News:

• The price of gold which last week set a new record, is set to scale new heights before the end of 2008. Prices topped $860 an ounce, well above the $850 record set in 1980. The director of Thebulliondesk.com is predicting the average price this year to be around $950 an ounce.

• The cost of oil receded over the weekend from its highs of $100 per barrel to now be trading at $97.38 per barrel.

• The low yielding currencies are still strong with Yen and Swiss continuing to reap the rewards of the safe haven status.

 

 

Friday 4th January 2008 Interbank
GB POUNDS / EURO  1.3397
Sterling continues its fall against the Euro and Dollar


Pounds:

Sterling continued its fall yesterday as it fell against the Euro and Dollar. We hit 1.3364 against the Euro and 1.9673 against the Dollar.

The BoE are saying that the credit markets will tighten further, adding more pressure for a rate cut next week.

The banks quarterly credit conditions survey have found that mortgage defaults were likely to rise in the next three months, adding to mounting evidence that the housing market is quickly cooling.

Data out today will be due at 9.30AM UK time: M4 Money Supply, Mortgage Approvals expected at 83k from 88k previous month. Also PMI Services expected at 51.5 from 51.9 previous month.


Euros:

The Euro was supported by data that showed German unemployment fell to its lowest level since March 1993, sending it to a high $1.4781 against the dollar in early trade.

The Euro zone will keep a close eye on the extent of the slowdown of exports to the US. They will be monitoring surveys very closely in the months ahead before taking a view on its implications for growth 2008/9.

General Euro Currency News:

• The Swiss and the Yen were the winners yesterday as the lower yielding currencies advanced in the face of mounting risks from economic slowdown and rising inflationary pressures.

• Oil set a record of $100.09 a barrel in intraday trade, breaking through the $100 level that was briefly reached in the previous session in a single trade.

• Gold and platinum continue their good start to the year as they continue to benefit from the weak dollar

 

Thursday 3rd January 2008 Interbank
GB POUNDS / EURO  1.3454
Sterling falls to lowest levels ever against the Euro


Pounds:

Sterling was batted out of the park yesterday on the back of weak economic data and more pressure on the BoE to cut rates sooner rather than later.

New manufacturing orders slumped to a two-year low. The chartered institute of purchasing and supply/RBS headline purchasing managers index fell to 52.9 in December, well short of forecasts and down from 54,3 in November. This has increase pressure on the BoE to cut rates further when they meet next week. Most analysts have already pencilled in two more quarter-point cuts by the summer with some suggesting rates will fall to 4 per cent by the Spring of 2009

Data out today will focus on the PMI Construction figures which are due out at 9.30am UK time. Previous month it was 54.3 and consensus is a fall to 53.5

No speakers today


Euros:


European manufacturing numbers showed activity in the eurozone was resilient, boosting the euro to an all time high against sterling. The ECB are expected to keep up their hawkish rhetoric, but to nevertheless leave its key interest rate at 4 per cent for many months to come.

The euro rose 1.4 per cent against sterling and hit 1.4750 against the greenback.

Data released today to watch will be the German unemployment due at 8.55am.


General Euro Currency News:

• Crude oil prices briefly hit the $100-a-barrell mark for the first time yesterday. Tension in Nigeria has helped push the price of oil up further . But it was an independent oil trader that seemed to cement his place in market history by buying the smallest order aloud on the market to push the price just over the $100 mark.

• The Yen benefited yesterday on the back of the flight to safety as the carry trade was shunned.

• Commodity markets made a flying start to 2008 with gold, oil and platinum setting records during the first trading session of the new year. Gold hit $861.10 a troy ounce and platinum rose 1.6% to $1,544 a troy ounce.

 

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