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Monday 30th June 2008 Interbank rates GB POUNDS / EURO 1.2623 EURO / GB POUND 0.7922 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
UK consumers confidence weakest since March 1990.
Pounds:
Sterling’s position against the majors saw little
change over the weekend, with cable still threatening to
breakthrough the $2 level, which is quite surprising considering the
continuing poor economic flow of data
which keeps emphasising the problems the UK economy is having.
A poll
released today by Gfk NOP showed
UK consumers are feeling gloomier than they have for 18 years,
indicating that consumer spending could slow
sharply in the months ahead. The figure showed a fall to –34 in June,
from –29 in May, its lowest level since
March 1990. Housing prices also fell, for the ninth straight month in
June, with the annual drop in prices being
the deepest since September 2005.
On Friday the UK reported that the
economy grew 0.3% in the first quarter,
the slowest expansion in three years.
Data at 9.30am: Mortgage Approvals expected at 51k from 58k previous.
Euros:
The euro is holding its ground against the dollar and pound from last
week, despite gloomy economic data
released on Friday. Business and consumer confidence in the 15 countries
that use the euro weakened significantly
in June as the European Central Bank looks set to raise interest rates
next month. Signs of a slowdown
are unlikely to stop the ECB from pressing ahead with a rate hike when
its governing council meets on July
3rd. In early June, ECB President Jean-Claude Trichet signalled such a
move was likely, and subsequent comments
from other members of the governing council have cemented that the key
rate will rise to 4.25% from
4.0%, the first move since June 2007.
Data at 10.00am: Italian CPI Mom expected at 0.3% from 0.5% previous,
Eurozone CPI YoY expected
at 3.9% from 3.6% previous.
General Euro Currency News:
• Oil rallied to trade at $142.15 today bolstered by a weak dollar and
continuing tensions between Israel
and Iran over Tehran's nuclear programme that had helped oil hit a
record near $143 last week.
• Taylor Wimpey will this week reveal plans to bolster its finances by
up to £500m through an emergency
share issue—the first company from the battered house building sector to
seek fresh capital.
Friday 27th June 2008 Interbank rates GB POUNDS / EURO 1.2606 EURO / GB POUND 0.7933 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
Bank of England Deputy Governor comments that inflation to top 4% in
coming months.
Pounds:
All the moves seem to have come from the other major
currencies as sterling climbed against the dollar, but
dipped slightly against the euro. Cable saw over a cent gain as the
pound saw a rally towards the $1.99 level,
just easing off this morning.
Against the single currency there has been
little change, with the pound still under
pressure as the markets seem to be pricing in a move upwards in the eurozone, making it hard for the
pound to make any positive gains. BoE Deputy Governor John Gieve said
yesterday that UK inflation will rise
sharply in coming months, topping 4.0%.
Data at 9.30am: Current Account expected at –12.1B from –8.5B previous.
Euros:
The euro is easing back a bit this morning against the dollar, as
traders take some profit in Asian trading after
closing in on the $1.58 level. The single currency made 1 cent gain on
the dollar yesterday as investors plied
into the single currency. The expectation that the ECB will hike
interest rates next week has almost already
been priced in. The markets are now looking towards the $1.60 level as a
possibility in the coming weeks.
Against the pound there was little movement as the single currency
stayed in a tight range around 0.7936.
ECB members were also giving strength to the euro on comments regarding
inflation in the eurozone, claiming
inflation had reached alarming levels and that the current rate of
inflation is a serious worry for the ECB.
Data at 9.00am: Eurozone Business Climate Indicator expected at 0.40
from 0.54 previous.
General Euro Currency News:
• Oil prices nearly topped $140 yesterday following the OPEC presidents
forecast that prices could soon
surge as high as $170 a barrel. We have seen a slight pull back this
morning, currently trading at
$138.96.
• Data released in Japan has raised the possibility of a recession as
inflation hits a 10 year high.
• Spot gold is down $2.20 a troy ounce today after yesterdays rally. We
are currently trading at $914.60
Thursday 26th June 2008 Interbank rates GB POUNDS / EURO 1.2623 EURO / GB POUND 0.7922 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
Euro gains—markets look for ECB to raise rates, possibly next
month.
Pounds:
Sterling had a mixed day yesterday against the dollar and euro. Against
the greenback we saw the pound
gain over 1 cent as the Fed left rates unchanged. Cable has now rallied
towards the $1.98, but dropped of
slightly this morning to trade at $1.9726.
The pound didn't fair as well
against the euro as signals from the ECB that they may raise interest rates next month saw sterling fall from
1.2659 to trade below 1.26 this
morning.
Data at 9.30am: Total Business Investment QoQ expected at –1.4%
unchanged.
Euros:
The euro came out in a strong position yesterday after the Fed failed to
rally the dollar by leaving interest
rates unchanged. In contrast, the European Central Bank has flagged it
will hike rates as early as next month
from the current level of 4.0%, widening the interest rate differential
against the greenback.
The single currency
pulled over a cent back on the dollar, and has rallied against the pound
with a move from 0.7899 to
trade at 0.7932 this morning.
Data released in the morning trading
session showed German import prices
grew above expectations in May, driven by higher fuel prices.
Data at 9.00am: Eurozone M3 (3M) May expected at 10.4% from 10.7%
previous
General Euro Currency News:
• The Yen was the only currency which didn't manage to gain against the
dollar yesterday. The outlook
for the Japanese economy is not looking positive. Bank of Japan Policy
Board member Seiji Nakamura
said that risks for the Japanese economy have heightened in June from
May, citing global inflationary
pressure.
• The New Zealand dollar also seems to be under pressure as of late, as
weak economic data weighed
heavily on its currency. Consumer confidence data came in much weaker
than expected, pushing the
Kiwi down against both the pound and dollar.
Wednesday 25th June 2008 Interbank rates GB POUNDS / EURO 1.2639 EURO / GB POUND 0.7912 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
Markets focus on Fed interest rate decision due at 7.15pm.
Pounds:
Sterling was little changed yesterday as it too seemed to be playing a
waiting game along with the rest of the
majors, in the run up to the Fed meeting later today. Cable saw little
movement despite poor economic data
from the US, and against the single currency we are more or less
unchanged.
Data was pretty quiet from the
UK yesterday, but there was some mortgage data released which showed UK
mortgage approvals had
slumped to an 11 year low in May, while net lending also dropped sharply
as the credit crunch continued to
weaken housing market activity.
Euros:
The euro is mixed at present while traders wait to see if the Fed backs
away from its recent hawkish rhetoric
while expectations remain intact for an eventual rate hike by the
European Central Bank. If the Fed indeed
does tone down its view, the euro stands to gain.
Movement against both
the dollar and pound has been very
limited as markets await the outcome from the Fed later today. Data
released yesterday came in the form of
the German Ifo as it showed Germany’s economic upswing is coming to a
halt due to weaker global growth, a
strong euro and higher energy prices.
After strong data released at the
start of the year, Europe's largest
economy will slow significantly in the remainder of this year and a
slight contraction in GDP can be expected
for the second quarter.
Data at 10.00pm: Eurozone Industrial New Orders MoM expected at –0.5%
from –1.0% previous.
General Euro Currency News:
• The Yen continues to be under pressure as the outlook for the Asian
currency looks bleak. Unfavourable
yield spreads, weakening Japanese data and outflows seem to be
conspiring against the currency.
Even risk aversion, which normally boosts the low-yielding currency as
investors retreat to low risk
currencies, hasn’t benefited it of late.
• Oil prices are marginally lower today ahead of a weekly report on US
energy stockpiles and after
OPEC’s president rebuffed calls for the cartel to boost output. Nymex
crude was down 19 cents to
$136.81 per barrel.
Tuesday 24th June 2008 Interbank rates GB POUNDS / EURO 1.2609 EURO / GB POUND 0.7931 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
Sterling little changed ahead of key Fed interest rate decision
tomorrow.
Pounds:
Sterling is also little changed from yesterday as
investors position themselves ahead of the FOMC decision
tomorrow. There has only been a 10 pip move against the euro in the
favour of the pound and a 15 pip move
down on the dollar.
There are reports that the UK could lose 350,000
jobs and see almost £1bn wiped off
company profits, according to research based on the forecasts of
business leaders. The findings by Hay Group
and the Centre for Economic and Business Research, which draws on the
outlook of 120 business heads, suggest
that the economic slowdown produced by the credit crises could continue
to depress company performance
up to 2010.
There was no data out of the UK yesterday and only BBA House
Purchase Data today.
Data at 9.30am: BBA Loans for House Purchase.
Euros:
The euro is mixed Tuesday morning as traders wind down activity ahead of
the US rate decision due tomorrow.
Data released yesterday showed manufacturing activity and declining
confidence among businesses in
Europe sparked fresh concerns about developed economies outside the US,
working against the single currency
and in the favour of the greenback.
German business confidence
deteriorated significantly in June in the
wake of record high oil prices and a weaker export outlook, a survey
from the German Ifo institute showed
yesterday. The index fell to 101.3 in June from 103.5 in May, with the
market expecting only a fall to 102.3.
Activity in the eurozone economy dropped to its weakest level for five
years in June, with the services sector
and manufacturing sectors driving the decline.
No data today.
General Euro Currency News:
• The Australian dollar has rallied on the back of record prices being
agreed with China for iron ore.
• Oil is $2 per barrel as the markets ignore the boost in production
from Saudi Arabia. Current levels put
Nymex at $137.01 per barrel.
• Spot gold is up $2 at $885.70 per troy ounce, after its retreat
overnight surprised the market given the
steady showing in other commodities.
Monday 23rd June 2008 Interbank rates GB POUNDS / EURO 1.2661 EURO / GB POUND 0.7898 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
UK House asking prices fall in June from record high the previous
month.
Pounds:
Sterling is down slightly from Fridays close after data released
overnight from online estate agent
‘Rightmove’, showed a drop in UK house asking prices in June. The asking
price for a home in the UK fell in
June from a record high the previous month as vendors scaled back their
expectations in view of the credit
crunch, an uncertain economic outlook and a rise in properties for sale.
The average asking price for a residential
property fell 1.2% on the month from a rise of 1.2% month previous.
Looking ahead to this week, UK
data is expected to confirm earlier estimates of business investment and
gross domestic product growth, but
the figures could well be overshadowed by what Bank of England
policymakers have to say. Several BOE
Monetary Policy Committee members, including Governor Mervyn King, are
due to face questions from a committee
of members of parliament on Thursday. The hearing will mainly be on the
May Inflation Report, but
events have moved on considerably over the past month, with inflation
rising more than a percentage point
above its target and the BOE governor having written to the chancellor
in response.
No data today.
Euros:
The single currency is little changed from the dollar over the weekend
and slightly up on the pound after UK
data released overnight. There has been a lot of press coverage
regarding interest rates in the eurozone over
the weekend. ECB member Juergen Stark was quoted as saying the ECB must
“seriously review the current
level of interest rates”, in light of the current eurozone inflation
rates and expectations that inflation will remain
high in the coming months.
In a busy week ahead for the eurozone,
economists expect the PMI due
Monday to weaken further with Germany’s Ifo reading also expected to
post a weaker level.
Data 9.00am: E/Zone PMI Manu. Expec at 50.2 from 50.5. German Ifo expec
102.5 from 103.5
General Euro Currency News:
• Citigroup is set to unveil layoffs totalling as much as 10% of its
worldwide investment banking work
force.
• Oil is up from Fridays close even after Saudi Arabia's pledge to boost
supply.
• Spot gold has moved over the $900 level this morning with a $3.55
increase at $904.85
Friday 20th June 2008 Interbank rates GB POUNDS / EURO 1.2665 EURO / GB POUND 0.7895 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
UK May Retail sales growth highest since 1986.
Pounds:
Sellers of sterling finally had something to smile
about yesterday as we saw the pound soar against the majors.
A gain of nearly one and a half cents was made on cable to hit $1.9740,
and a similar gain was made on
the euro, starting out at 1.2585 to rally to 1.2731. The main reason for
the rally was news that UK retail sales
rose 3.5% last month, versus an expected 0.1% decline. The data
contradicted recent suggestions from the
Bank of England that it cant hike rates in response to higher inflation
because of the economic and financial
crises.
The gain in retail sales was the biggest monthly gain for 22
years in May, driven by surging sales of
seasonal food and clothing. The gain for the year was also way above
market expectations, with a rise to
8.1% on the year, from a predicated rise of only 4.1%. The stronger than
expected data will puzzle the Bank
of England’s Monetary Policy Committee, which has forecast that consumer
spending will slow sharply this
year, a development it said is needed to bring inflation back to its
target. The retail sales figures combined
with rumours that a rate hike was mentioned in the minutes released by
the MPC earlier in the week may lead
people to believe the next move for interest rates in the UK will be up
next month.
No data today.
Euros:
The euro is flat against the dollar and yen today as investors weighed
the Fed’s likely intentions and the latest
moves in oil. The currency cross which made all the headlines was EUR/GBP
as the euro was pushed down by
a resurgent pound.
The single currency dropped to a three week low
against sterling as a loss of 1.2% was
seen during the UK morning session. A drop from 0.7945 to 0.7849 was
witnessed yesterday just after
9.30am UK time.
Data at 9.00am: Italian Industrial Orders MoM expected at 0.4% from
–0.8% previous.
General Euro Currency News:
General
• The Swiss Franc fell sharply yesterday after Switzerland's central
bank left interest rates unchanged.
• Oil is down slightly from yesterday with a drop of over $4.00 as July
Nymex crude hit $131.80
• Gold is down 90 cents at $897.10 as oil prices soften.
Thursday 19th June 2008 Interbank rates GB POUNDS / EURO 1.2700 EURO / GB POUND 0.7874 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
Bank of England MPC voted 8 –1 to leave interest rates unchanged.
Pounds:
The pound faired ok yesterday considering all the
pressure sterling has been under of late. We have seen a
gain of a cent on the dollar to hit $1.9633 this morning and a 0.3% gain
on the euro to trade at 1.2618 in the
morning UK session. Bank of England MPC voted 8—1 to keep rates
unchanged at its June meeting, minutes
released yesterday revealed. BoE MPC’s Blanchflower voted for 25bp rate
cut in June, but some members
discussed the possibility of a hike.
The outcome of the vote was not a surprise, but the striking news is
that a group of members felt there had been enough new data to consider
“whether an immediate rise in the bank rate was warranted”.
Last night, Alistair Darling and Mervyn King spoke at the Mansion House
speech to city grandees to predict that the squeeze on real income
growth is likely to mean that both house prices and consumer spending
will weaken together. They delivered the bleakest official assessments
of economic prospects for 15 years in what the Bank of England governor
said was “the most challenging period” since 1997. But it was not all
doom and gloom as the CBI said there had been an unexpected bounce in
manufacturing order books over the last month.
Data at 9.30am: Retail Sales expected at –0.1% from –0.2%.
Euros:
The euro is higher against the dollar today but flat against the pound
and yen. While the euro is off its intraday
high of $1.5580, it still has an upward bias as sentiment is turning
negative towards the dollar.
The single
currency gained over a cent on the greenback to hit $1.5586 from a low
of $1.5462. With all the troubles the
pound is having, an unexpected gain for sterling has seen the euro drop
slightly from 0.7949 to 0.7928.
Data at 9.00am: Italian Unemployment Rate expected at 6.1% unchanged.
Data at 10.00am: Eurozone Construction Output.
General Euro Currency News:
• Morgan Stanley became the latest financial services group to fall
victim to a rogue trader as it admitted
that is had suspended a credit trader in London for trying to hide
losses of about $120 million.
• The cost of oil is up from yesterday, trading at $136.07 per barrel.
This seems partly because of supply
concerns in Nigeria and a weakening of the dollar against the euro and
other rivals.
Wednesday 18th June 2008 Interbank rates GB POUNDS / EURO 1.2700 EURO / GB POUND 0.7874 The above rates are for indication purposes
only and are not applicable for holiday money.
For holiday money rates
click here
UK consumer price inflation rises above 3.0% to 3.3% in May.
Pounds:
The pound was hit hard yesterday as economic data
released from the UK weighed heavily on sterling, weakening
its position against both the dollar and euro. We saw a 2 cent drop
posted against the greenback as
cable traded as low as $1.95, and a cent loss on the euro to hit 1.26.
UK consumer price inflation rose above
3.0% in May for only the second time since the Bank of England gained
independence for setting interest
rates, forcing the bank’s governor to write an explanatory letter to the
government. Consumer prices jumped
3.3% on the year, which was well above the BoE’s 2.0% inflation target
and higher than expectations of
economists surveyed by Dow Jones Newswires last week who forecasts a
3.1% gain. Any chance of an interest
rate reduction by the central bank has all been put to rest in recent
months, with a view that there may
be a rate hike coming soon. These views also now seem to be wavering as
the BoE seems to be joining the
Fed and ECB in dampening views of a rate hike due to inflation worries.
Data at 9.30am: Bank of England Minutes. 110.00am: UKCBI Monthly
Industrial Trends.
Euros:
The euro had a strong day
against the majors yesterday with a cent gain on the dollar and a move
to 0.7954
on sterling.
There is little movement today against the greenback but
expectations could be for a move up to
$1.56. Some players are starting to believe that the ECB might not
continue raising interest rates, but they
aren’t likely to buy the dollar instead of the euro as the economy in
the US is worse than that in the eurozone.
Interest rates rises in the eurozone were also calmed by a weak German
ZEW survey and comments.
The think tank’s economic expectations index fell to –52.4 from –41.4 in
May—below economists forecasts of
–42 and also below its historical average of 29.2.
Data at 10.00am: Eurozone Construction Output.
General Euro Currency News:
• World oil prices are lower today ahead of an expected output increase
by key producer Saudi Arabia.
Nymex oil for July dropped 65 cents to $133.36 per barrel.
• Consumers were warned to expect even sharper increases in global food
prices after US officials said
that some of the country’s best farmland was facing its worst flooding
for 15 years.
Tuesday 17th June 2008 Interbank rates GB POUNDS / EURO 1.2662 EURO / GB POUND 0.7897
Eurozone May CPI comes in stronger than expected.
Pounds:
The pound had a mixed day yesterday as it changed
little against the single currency, if anything slightly
down after the stronger than expected CPI data in the eurozone.
Direction for where sterling is going may
become a little clearer this morning as there is key economic data due
in the UK and from the eurozone.
From
the UK, CPI data is expected at 9.30am and is thought to be stronger
than the previous month, with economists
looking for a number of 3.2% from the previous month of 3.0%. From the eurozone we have the German
ZEW data which is usually a market mover, due at 10.00am. The pounds
stance against the dollar saw
the biggest move of the day, as cable shot up from $1.9497 to hit
$1.9688 as the markets view of an imminent
Fed interest rate rise lost momentum.
Data at 9.30am: Consumer Price Index YoY expec at 3.2% from 3.00% &
Retail Price Index.
Euros:
The euro recovered yesterday as a
less severe view of the Fed’s anti-inflation intentions lifted the
single currency.
The euro was additionally supported against the dollar by the latest
European inflation data that made
a rate hike by the European Central Bank next month all the more likely.
May eurozone CPI came in 3.7%
higher year on year, versus an expected 3.6% rise. The figures
reinforced expectations of monetary tightening
by the European Central Bank.
The single currency pulled back nearly 1%
against the dollar as the euro
rallied to $1.5511 this morning. Against the pound there was little
change as EUR/GBP traded in a tight range
between 0.7869—0.7897.
Data at 10.00am: German ZEW expec at –42.5 from –41.4 & Eurozone ZEW.
General Euro Currency News:
• Oil nearly hit $140 per barrel overnight but has slipped of Tuesday.
This was down to uncertainty over
a reported pledge by Saudi Arabia to hike output. Oil is now trading at
$134.65 per barrel.
• Spot gold is up $1.85 at $883.45 per troy ounce.
Monday 16th June 2008 Interbank rates GB POUNDS / EURO 1.2715 EURO / GB POUND 0.7864
For holiday money rates
click here
Sterling fights back against the euro & dollar.
Pounds:
The pound benefited against the euro on Friday as
the Irish no vote weakened off the single currencies grip
against sterling. The move has seen sterling rally from 1.2592 to break
through the 1.27 level this morning.
Against the dollar there was less of a move with sterling picking up
about a quarter of a cent to trade at
$1.9529 this morning.
This morning we have seen the Confederation of British Industry
quarterly report say that surging commodity prices will next year crimp
UK economic growth to its weakest level since 1992, but the Bank of
England should avoid raising interest rates to tame inflation.
UK data
due Tuesday are expected to show inflation surpassed 3.0% in May, a
level that requires the BoE Governor Mervyn King to write an open letter
to the government to explain why the rate is more than 1 per cent above
target.
No data.
Euros:
The euro finished the week off poorly after
Irish voters rejected a reform plan aimed at making the European
Union function better. Ireland was the only country to hold a referendum
and the voters made their view loud
and clear. This sent the single currency in a spiral downwards as it
lost over one and a half cents against the
dollar, from $1.5461 to hit $1.5305.
Over the weekend the single
currency did claw back some of those
losses, but we have seen it already give up those gains, dropping
through a key support level of $1.5390 and
trading close to the next support level of $1.5365.
Against the pound
there was also a loss, from 0.7941 to hit
0.7880. Data at 10.00am:Eurozone Consumer Price Index MoM expec at 0.6%
from 0.3%. YoY exped at 3.6% unch.
General Euro Currency News:
• Oil prices are lower Monday after the UN chief said top OPEC crude
producer Saudi Arabia agreed to
increase oil production. Nymex for July fell 86 cents to $1.34.
• The Yen has continued to weaken off against the dollar to hit Y108.24
and against sterling at Y211.46.
Friday 13th June 2008 Interbank rates GB POUNDS / EURO 1.2687 EURO / GB POUND 0.7882
For holiday money rates
click here
Speculation about an interest rate hike in UK does little to buoy
the pound.
Pounds:
Cable was down yesterday as the dollars rally dented
sterling’s position against the greenback. There was
over one and a half cent drop as cable has fallen below $1.95 this
morning. There has also been a fall against
the euro as GBP/EUR is threatening to fall below the 1.26 level this
morning.
Sterling drew little strength
from growing expectations of rate rises from the central bank after a
survey showed inflationary expectations
rose to a record high in May.
Traders fear higher borrowing costs could
trigger a housing market crash and
undermine the British economy. The pounds position against the Yen has
pushed up over the last few days as
we have seen the Y210.00 level breached. A small rally has also been
seen against the South African currency
after the South African central bank only raised interest rates by 50
basis points.
No data today.
Euros:
The euro is still fairly strong against
sterling but has suffered on the back of a resurgent dollar. The single
currency is still in a strong position after various central bank
members keep talking up a potential interest
rate hike, which was reiterated this morning after ECB Governing Council
member Guy Quaden said the eurozone
inflation is in “risky territory” and the ECB should consider a small
interest rate hike in July.
Higher food
and energy prices helped push the eurozones inflation rate to 3.6% in
May from 3.3% in April. The ECB’s
mandate is to keep inflation below but near 2%. Quaden described
eurozone inflation a matter of “great concern”.
No data today.
General Euro Currency News:
• Bank of Japan voted unanimously to keep interest rates steady at 0.5%.
• The South African rand suffered after the central bank only raised
interest rates by 50 basis points.
Market expectations were looking for a full cent rise.
Thursday 12th June 2008 Interbank rates GB POUNDS / EURO 1.2640 EURO / GB POUND 0.7911
For holiday money rates
click here
FTSE takes tumble as banks, retail and home builders hit hard.
Pounds:
UK markets were left reeling from yesterdays action
which saw the FTSE shed over 100 points. Particularly
hard hit were the banking and constructions sectors. HBOS, RBS and
Bradford and Bingley took significant
hits. Sterling held up well as the BoE’s staunch opposition to lowering
interest rates have made the markets
re-evaluate their interest rate expectations for the United Kingdom.
The BoE’s Quarterly Inflation report
should confirm sustained inflationary pressures over the past quarter.
Data: 0930 UK Bank of England Quarterly Inflation Report
Euros:
The European Central Bank moved to damp down
market expectations of a flurry of interest rate rises in the
coming months . Comments by ECB governing council members sought to
correct financial markets’ impression
that July’s expected hike would mark the resumption of a monetary policy
tightening cycle – an expectation
that has depressed bonds and the dollar while possibly helping to
inflate oil prices. Dealers are holding
out the possibility that the Euro could sink to $1.54 today with rumours
of central bank intervention in support
of the USD and a stronger than expected retail sales figure out for the
US later today.
Data: 0900 EA ECB publishes June monthly report / 1000 EA Industrial
production yoy
General Euro Currency News:
• Rumours that Saudi Arabia has privately agreed to increase oil
production. No confirmation as yet
• Talk that several financial institutions are being forced to
repatriate USD
• Irish vote on the Lisbon Treaty (effectively a precursor to an EU
constitution) is on a knife edge with a
‘NO’ vote slightly favoured at this point.
Wednesday 11th June 2008 Interbank GB POUNDS / EURO 1.2635 EURO / GB POUND 0.7914
BOE Governor Mervyn King warns of UK stagflation.
Pounds:
Mervyn King continues to make noises about the looming threat of
inflation clearly indicating that the Bank of
England will not succumb to those clamouring for a cut in interest
rates. King warned that the UK faces a very
real prospect of stagflation where slow growth is coupled with rising
prices. The continued hawkish tone from
the BOE could give Sterling a boost as the markets price in the
possibility of an interest rate hike later this
year.
Mansoor Mohi-uddin, chief currency strategist with UBS in Zurich,
said as he raised his sterling forecast
to GBP/USD $2.00 in the next month and he is not alone.
Barclays Capital
suggests buying Sterling on any
dips from here on.
Data: No major announcements today
Euros:
The Euro has dipped against all the Majors as the markets
remain wary of a shift in US monetary policy and
ECB officials slightly backtrack on earlier comments regarding interest
rate hikes.
There are increasing calls of
distress from EU members such as Spain and Ireland who are dealing with
dramatic slowdowns and lack the
ability to cut interest rates. Today Ireland votes on the Lisbon Treaty
and a rejection would be seem as a further
blow to the EU’s credibility. Nevertheless, The ECB remains focused on
inflation and this should keep the
Euro supported in the long term.
Data: Ireland votes on Lisbon treaty
General Euro Currency News:
• The Bank of Canada surprised markets by holding interest rates at
3.00% and suggested rate hikes
could follow as inflation picks up
• UK homebuilders face cash calls as funding dries up
• US Investment banks face further writedowns as Bond Insurers AMBAC and
MBIA lose AAA status
Tuesday 10th June 2008 Interbank GB POUNDS / EURO 1.2601 EURO / GB POUND 0.7936
Mixed economic data for pound.
Pounds:
The pound was slightly up against the euro but slightly down on the
dollar as we saw a mixed bag of economic
data in the UK. We saw retail sales rebound in the UK in May, with sales
of food and clothing boosted
by the surging commodity prices and warmer weather respectively, the
British Retail Consortium said today.
Same store sales were up 1.9% on
May 2007 which was stronger than
economists had predicted.
According
to the RICS’s survey the number of chartered surveyors reporting falls
in house prices fell slightly during
May
2008,
but the quantity of transactions completed fell to its lowest level in
30 years.
UK factory gate prices released
yesterday soared in May, climbing at their fastest pace since records
began in 1986, highlighting the policy
dilemma faced by the Bank of England in the coming months as the
corporate and consumer mood darkens.
The output price index for home sales and manufacturing products rose
1.6% on the month in May, and 8.9%
on the year. Economists expected figures at 0.7% and 7.9% respectively.
Data at 9.30am: Industrial Production M/M expec at 0.0% from –0.5%
previous, YoY: Expec 0.1% from 0.2%
Euros:
The euro gave up some of its gains yesterday as the
dollar fought back against the single currency. It seems
the Fed was not to be out done by the ECB with talks on the battle
against inflation. Trichet’s comments over
the last few days regarding the increasing pressures from inflation,
with a potential rise in interest rates
seems to have been matched by Fed comments regarding inflation worries
now in the US.
The euro lost over
two cents on the dollar falling from $1.5829 to trade at $1.5565 this
morning and against the pound saw a
1% loss, dropping from 0.8030 to 0.7936 this morning.
Data at 10.00am: Italian GDP.
General Euro Currency News:
• Oil dropped over $4 per barrel after the highs of the last few days to
trade at $134.35/barrel.
• At 2.00pm: Bank of Canada will release its decision on interest rates.
Early speculation was for a 25
basis point reduction to 2.75%, but that view seems to have wavered over
the last few days.
• The Yen has weakened against the pound and the dollar despite
speculation that BoJ may raise rates.
Monday 9th June 2008 Interbank GB POUNDS / EURO 1.2559 EURO / GB POUND 0.7963
Sterling hits 6 week low against the Euro.
Pounds:
Sterling’s ever declining value against the euro continued on Friday as
the pound posted a 1 cent drop against
the euro. News of the ECB’s potential change in interest rates upwards
as early as next month is weighing
heavily on GBP/EURO and the loss has continued into this morning,
currently trading at 1.2463.
Against the
dollar, sterling has faired better as the greenback plunged on the back
of weak economic data. Cable gained 2
cents and clawed back some of the losses made over the last week,
currently trading at $1.9710.
Looking
ahead to this week, economic data due is expected to show that factory
gate price pressures continue to
mount and industrial output growth is slowing further, according to
economists.
Data at 9.30am: PPI Input Y/Y expected at 23.8% from 23.3% previous,
Output Y/Y expected at 7.9% from
7.5% previous.
Euros:
The end of the week belonged to the euro as the single
currency posted strong gains across the majors. The
European Central Bank now seem to be thinking about interest rate hikes,
with some economists calling for a
rise as early as next month and another possible rise two or three
months after that. This combined with the
poor jobs data from the US on Friday has pushed EURO/USD over the $1.5819
this morning.
Friday’s gains
were a solid 2 cents, with the rally continuing this morning. The euro
has also pushed up against the pound as
we are now seeing a 6 week high against sterling, breaking through the
0.80 level this morning. This morning
we have seen German Trade Balance widen to 18.7B in April from 16.7B in
March.
Data at 23.01: German Manpower Employment Outlook.
General Euro Currency News:
• Oil prices shot up on Friday by more than $11 a barrel and neared $140
a barrel. Fears that it could hit
$150 per barrel has prompted consumer nations to urge a production
increase amid warnings of a
global recession. On Sunday, Iran’s representative to the OPEC oil
cartel warned the price of crude oil
is set to rise even further by the end of the summer. Prices has pulled
back slightly this morning and
are now trading at $137.77 per barrel.
Friday 6th June 2008 Interbank GB POUNDS / EURO 1.2532 EURO / GB POUND 0.7979
Bank of England leaves interest rates unchanged at 5.00%
Pounds:
The Bank of England left interest rates unchanged at 5.00% yesterday
which was as expected. There was a small gain against the
US dollar as
sterling put on half a cent to trade from $1.9507 to $1.9564 this
morning.
The big fall was against the euro as we saw over a full cent lost with
the pound falling from 1.2678 to hit
1.2530 in early morning trade. The comments by ECB president with
regards to a possible rate hike next
month buoyed the single currency and has put the pound firmly on the
back foot. Even though we saw cable
gain slightly, the market will be looking for key US data today to give
it some direction for the short term for
where GBP/USD may be heading.
The long term view seems to be for the
dollar to make back some of the
losses made against the pound over the last 12 months.
Euros:
The European Central Bank left interest rates unchanged
at 4.00% yesterday which was no surprise to the
markets. What was unexpected was the comments regarding future interest
rates in the ensuing news conference.
ECB President Jean-Claude Trichet hinted that eurozone interest rates
could rise and that a “small” increase
in interest rates is possible next month, but “not certain.”
The central
bank remained on “heightened
alert” over inflationary pressures, he said. Mr Trichet sounded much
more hawkish than a month ago on inflation.
The euro gained over 1 cent against both the pound and the dollar.
Data at 11.00am: German Industrial Production M/M expected at 0.2%
from—0.5% previous.
General Euro Currency News:
• The Yen extended its losses against the dollar, euro and pound
yesterday and it has continued into
today's session, due to continued speculation of interest rate hikes in
both the euro zone and the US.
Tokyo dealers say the yen could fall to Y107 versus the greenback, due
to a resurgence of yen carry
trades. The pound has gained over 1% against the Yen as it was trading
at 205.86 yesterday.
• Oil rebounded yesterday, adding a surprising $5 per barrel on a
falling dollar, now trading at $128.10.
Thursday 5th June 2008 Interbank GB POUNDS / EURO 1.2625 EURO / GB POUND 0.7920
UBS -UK house builders profits to face extreme pressure this year
& next.
Pounds:
Economic data from the UK weighed heavily on sterling yesterday as we
saw losses made against both the
euro and dollar. The battered shares of UK house builders took another
beating following a bleak report from
UBS that warned the companies profits would face extreme pressure this
year and next. The report cited rapidly
deteriorating conditions in the UK housing market, including the drop in
mortgage lending, house price
deflation and collapsing reservations, which UBS said were down 50% in
April.
The Purchasing Managers Index
for the UK’s dominant services sector fell to 49.8 in May from 50.5 in
April, making the first contraction in
activity in the sector since March 2003.
The market was expecting the PMI to edge down to 50.3. A reading
above 50 indicates an expansion in activity in the sector, while a level
below 50 signals a contraction. The
weak economic data will cast doubt on the Bank of England’s ability to
deliver a tighter monetary policy. The
bank is widely expected to keep rates unchanged today at 5%.
Data at 12.00: Bank of England Rate Decision expected unchanged at 5%
Euros:
The euro is lower today against the dollar but slightly
up against the pound. The single currency has been
struggling of late against the greenback as the Fed seems to be changing
its stance on possible intervention.
If the euro/dollar makes some of those losses back and heads back
towards the $1.60 area, traders fear
there may now be some intervention.
Many foreign exchange analysts
believe that Bernanke on Tuesday was
sending a signal to markets. “You better have good fundamental reasons
to weaken the dollar much further”.
Activity in the eurozone economy slowed in May, with the services sector
leading the decline. The figure released
was a fall to 50.6 in May. The ECB is widely expected to leave interest
rates unchanged today at 4.%.
Data at 11.00am: German factory Orders, 12.45: European Central Bank
Rate Decision expected at 4%
General Euro Currency News:
• Oil dropped below $122 a barrel today, extending its decline from last
months record after US energy
department said gasoline demand fell sharply last week. Latest trading
price was $121.79 per barrel.
• Data just released: UK Halifax house prices drop lower than expected
in May. Halifax house prices
index has declined 2.4% in May from April, while they fell 3.8% from
May
2007, instead of the 1.0%
monthly decline, and the 3.5% yearly fall expected by market analysts.
Wednesday 4th June 2008 Interbank GB POUNDS / EURO 1.2662 EURO / GB POUND 0.7897
UK consumer confidence falls to its weakest level in four years.
Pounds:
Sterling had a mixed day yesterday after making gains against the euro,
but falling down on cable. The pound
benefited from comments by ECB President and gained over 1 cent to rally
from 1.2595 to 1.2730. On cable
we saw a move to the downside as comments by the Fed Chairman boosted
the US currency, buoying the
dollar from $1.9741 to $1.96.
More losses have been posted today as UK
consumer confidence fell to its
weakest level in four years in May as global credit crunch and the rise
in energy and food costs heightened
concerns about the economic outlook, according to the Nationwide
Building Society.
The lenders consumer
confidence index fell to 69 in May from 70 in April, marking the lowest
level since the survey began in May
2004.
Data at 9.30am: Purchasing Manager Index Services expected at 50.5 from
50.4 previous. At 10.30am: BRC
Shop Price Index.
Euros:
The euro was under pressure from all angles yesterday as
we saw a cent loss against the dollar and 1% loss
against the pound. Economists are looking for a break on euro-dollar to
fall below $1.53 in the next few days
on renewed US Dollar strength following the Fed jawboning.
The euro
dropped from 0.7940 to hit 0.7855
against the pound, although some losses have been made back today after
poor economic data from the UK.
Looking ahead this week the European Central Bank President Jean Claude
Trichet is expected to remain
hawkish after the governing council meeting on Thursday.
Data at 10.00am: Eurozone retail Sales expected at 0.2% from –0.4%
previous.
General Euro Currency News:
• Reports the Lehman Brothers planned to raise $4 billion in capital
later expanded into a rumour on
trading desks that the investment bank approached the Federal Reserve to
borrow money. Lehman
dropped as much as 14.5%, dragging down other banks and brokerages.
• Oil lost over 3 dollars yesterday in reaction to US federal Reserve
Chairman Ben Bernanke’s hawkish
comments about inflation. Nymex crude for July was trading at $124.01.
Tuesday 3nd June 2008 Interbank GB POUNDS / EURO 1.2608 EURO / GB POUND 0.7931
Banking worries in UK puts sterling under more pressure.
Pounds:
The currency markets were slightly muted yesterday,
but the reports that Britain's largest lender of buy-to-let
mortgages, Bradford and Bingley PLC, will reveal a significant profit
warning, stole the show. The bank’s problems
not only reflect the country’s deteriorating housing market but, they
are triggering widespread concern
that British banks are sitting on a time-bomb of rising mortgage arrears
and mounting bad debt.
The pound
has already come under pressure after last weeks data showed rapidly
falling house prices, collapsing consumer
confidence and signs of softening pay settlements.
More bad news was
revealed yesterday with the
latest purchasing managers index for manufacturing, which fell to 50 in
May from 50.8 in April even though
the market had been looking for a fall to only 50.5.
UK mortgage
approvals also released yesterday, shows
the lowest result on record in April, while consumer appetite for debt
slumped to its lowest level in almost six
years.
Data at 24.01: Nationwide Consumer Confidence expected at 67 from 70
previously.
Euros:
The single currency is trading in narrow ranges this week
despite the pressure it was under from the back end
of last week with data released showing that German retail sales fell
sharply, despite consensus forecasts for
a rise.
The euro will focus on pending key interest rate decisions and
US labour data due later this week. Dealers
figures expect the euro will explore narrow ranges until then.
Data at 10.00am: Eurozone producer Price Index expected at 6.1% from
5.7% previous.
General Euro Currency News:
• The Reserve Bank of Australia has said its board decided to leave its
cash target rate at 7.25% during
its monthly meeting early this morning. The decision was in line with
market expectations though most
economists believe the central bank could hike rates in August if second
quarter inflation data due next
month points to continuing upward pressure in the economy.
• Oil prices eased from yesterday on continuing concerns over demand,
trading at $127.76 per barrel.
Monday 2nd June 2008 Interbank GB POUNDS / EURO 1.2628 EURO / GB POUND 0.7919
Key interest rates decisions due on Thursday by ECB & BoE.
Pounds:
The pound had a positive day yesterday as we saw a three week high
reached against the euro. We have
seen 1.2764 hit this morning as sterling finally showed some strength.
This was despite a poll by Gfk NOP
showing that UK Consumers are feeling gloomier than they have been for
17.5 years, indicating that consumer
spending could slow sharply in the months ahead.
The surveys headline
measure of consumer confidence
fell to –29 in May from –24 in April, its lowest level since November
1990. Economists were expecting
the measure to drop to –26. The drop in confidence reflects worries
about the global credit crises, falling UK
house prices, rising fuel and food costs and concerns that the UK will
follow the US into a significant slowdown.
Against the dollar, the pound has been fairly steady.
No data today.
Euros:
The euro suffered yesterday as it posted 3 cent losses
against both the pound and dollar. The single currency
has dropped this week from 0.7973 to 0.7834.
Against the dollar the fall
was a bit steeper as it dropped from
$1.5775 to $1.5481. Better than expected US data and a fall in oil
strengthened the greenback against the
euro, but the poor economic data from the eurozone weighed heavily on
the single currency.
German unemployment
in May rose slightly in seasonal adjusted terms for the first time this
year, disappointing expectations
of a drop. Eurozone consumer confidence also weakened in May as
consumers in the 15 countries that
use the euro were at their most pessimistic in over a year in May, as
households became more downbeat
about their own situation and also about the general economic climate.
Data at 10.00am: Eurozone Unemployment Rate expected 7.1% unchanged.
General Euro Currency News:
• Oil prices are lower Friday, with July Nymex crude down 11 cents at
$126.51 a barrel, extending overnight
losses due to a weak outlook for US gasoline demand.
• A mix of poor economic data has weakened the Yen against a basket of
currencies with a month low
posted against the pound to trade at Y208.01 this morning.
