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Friday 30th May 2008 Interbank GB POUNDS / EURO 1.2755 EURO / GB POUND 0.7840
Sterling rallies to 3 week high against the euro despite poor
economic data.
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.
Thursday 29th May 2008 Interbank GB POUNDS / EURO 1.2638 EURO / GB POUND 0.7912
UK Nationwide house prices post biggest drop on record in May.
Pounds:
Sterling had a good day yesterday as we saw the pound gain over 1 cent
against the euro, to rise from
1.2570 to trade over 1.2685, and against the dollar we saw over a cent
rally from $1.9705 to hit $1.9825.
The rise in sterling euro was helped by poor economic data out of the eurozone which weighed heavily on
the single currency. This morning has seen the pound give up some of
those gains as housing data was released
by the Nationwide Building Society. UK house prices posted their biggest
monthly drop on record in
May as the credit crunch and weakening economy continued to weigh on the
residential property market.
House prices fell 2.5% in May , the largest decline since the index
began in Jan 1991. On the year prices fell
4.4%, the biggest drop on an annualized basis since Dec 1992.
Data at 11.00am: UK CBI Distributive Trades Report.
Euros:
The single currency was under pressure from all sides on
Wednesday as the euro lost ground against all the
majors. Poor economic data from France, Germany and Spain weighed
heavily on the single currency which
was topped off by the Eurozone’s seasonally adjusted current account
deficit posting it’s largest deficit in
more than a year in
March, as deficits in goods, income and current
transfers dragged the measure down.
The euro dropped from 0.7955 to 0.7883, but has pulled back some of
those losses this morning to trade at
0.7905. Against the dollar the euro looks to finish the week off under
pressure as it trades around $1.5580.
Data at 8.55am: German Unemployment, 9.00am: Eurozone Retail PMI,
10.00am: Eurozone Consumer Confidence
& Eurozone Business Climate Indicator.
General Euro Currency News:
• World oil prices are lower Thursday, but staying above $130 amid
growing jitters about falling US
gasoline consumption due to skyrocketing pump prices. Nymex July crude
fell 77 cents to $130.26 a
barrel.
• The Canadian dollar has pulled back some of its losses against the
pound as oil prices steadied after
the selling off on Tuesday evening, with a gain from 1.9684 to hit
1.9526 this morning.
Wednesday 28th May 2008 Interbank GB POUNDS / EURO 1.2623 EURO / GB POUND 0.7922
Mortgage lending in UK fell by nearly 40% last month year on year.
Pounds:
The pound benefited against the dollar as weak economic data hurt the
greenback. We have seen just under a
cent gain on cable from $1.9715 to $1.9812 this morning. Sterling has
also made a small gain against the
euro since early trade, pulling back 50 pips to trade at 1.2623. This
was despite more bad news on the home
front in the UK which continues to come thick and fast.
According to the
British Bankers Association (BBA)
mortgage lending fell by nearly 40% last month year on year as buyers
continued to struggle to secure home
loan deals. Up to 38,704 mortgage deals were approved by banks in April,
a slight improvement on the record
low in March—but 39.4% down on April last year and the second lowest
level on record.
No data today.
Euros:
The euro is still holding steady against the pound as
economic data from both sides seem to be cancelling out
any move for either currency.
Data released from Germany today showed
import prices rose 0.9% from
March and were up 5.7% compared with April last year, driven by higher
fuel costs.
Economists polled by
Thompson Financial forecast a 0.6% rise in
April from March and a 5.3%
year on year increase.
French consumer
confidence dropped more than expected and fell to a new record low in
May. Against the dollar however,
the euro is still at the top end of its recent range and there are few
technical hurdles in the way of its
record high of $1.6020.
Data at 9.00am: Eurozone Current Account.
General Euro Currency News:
• Oil was dumped yesterday on profit taking after fresh data triggered
concerns the US economy will
slow down markedly, curbing oil demand. Nymex July crude fell $5 to
$128.00.
• ANZ Bank’s economists believe there will be two more 25 basis point
increases in Australia’s official
cash rate this year as the nation’s central bank tries to put a cap on
inflation.
• The Canadian dollar ended slightly lower yesterday as a steep pullback
in crude oil prices served to
prolong what’s thus far been a mild corrective phase for the currency.
Tuesday 27th May 2008 Interbank GB POUNDS / EURO 1.2537 EURO / GB POUND 0.7976
UK services sector hit by economic slowdown.
Pounds:
Sterling has kept close to its closing prices from before the bank
holiday against both the euro and the dollar.
The pound is looking slightly stronger against the dollar compared to a
few weeks ago, after the greenback
was put under pressure due to expected weak economic data due this week
from the US.
A report in the Telegraph
has said that British companies dependent on UK consumer spending have
seen their profitability slump
to the lowest level in a decade in the latest sign that the country's
slowdown is worsening. In the past three
months, profitability at consumer-facing companies within the services
sector which makes up the lion’s
share of the economy fell to minus 30pc, according to a Confederation of
British Industry survey.
Data at 9.30am: BBA Loans for House Purchase.
Euros:
The euro is still firm on Tuesday after a strong rally
last week against the dollar. Investors are calling for the
single currency to extend its rise to resistance at $1.5820, with the
next level set at $1.60.
Yesterday saw
government debt decline as inflation concerns continue to drive the
market. Eurozone inflation data on Thursday
will be key on that front.
German consumer confidence is set to weaken
in June after a sudden improvement
in May, as rising inflation this month has damped consumers mood, German
market research group Gfk
said this morning. Gfk’s forward-looking consumer climate index declined
sharply to 4.9 points for June from
a downwardly revised 5.6 points in May. The expected figure was 5.8
points.
Data at 1.00pm German Ifo business climate. ECB’s Liebscher to speak at
10.15am.
General Euro Currency News:
• Oil is higher today after news of more violence in key African
exporter Nigeria. Nymex crude climbed
81 cents to $133.00 a barrel.
• Spot gold is up $3.30 at $930.75, but investors seem to be calling to
sell, rather than going long.
• Stagflation concerns may be hurting currencies elsewhere, but they are
unlikely to inflict much damage
on the Swiss franc. If anything, the Swiss currency could well
capitalise on worries over high inflation.
Friday 23rd May 2008 Interbank GB POUNDS / EURO 1.2577 EURO / GB POUND 0.7946
Sterling rallies after better than expected retail sales data.
Pounds:
A positive day for the pound at last yesterday as we saw sterling rally
a full cent against the euro from 1.2513
to trade over 1.2615. On cable we saw over a cent gain from $1.9733 to
rally over $1.9850. The pound has
managed to hold onto most of those gains into this mornings trade, and
the $2.00 level doesn’t look to far
off, should US data due next week come in negative for the US economy.
Data released yesterday morning
was UK retail sales which did fall in April, but the decline was less
than expected and march’s data were revised
upward. While the April data meant retail sales had fallen for the two
consecutive months for the first
time since January 2006, the numbers suggest UK consumer spending isn’t
collapsing despite a sharp decline
in consumer confidence and some grim recent business surveys.
Data at 9.30am: GDP expected at 2.5% unchanged, Private Consumption and
Gross Fixed Capital Formation.
Euros:
The euro is little changed from yesterday against the
dollar but did weaken off against the pound after better
than expected data from the UK. The single currency lost around a cent
against sterling in yesterdays morning
trade and has only managed a small fight back today.
The single
currencies position against the
US dollar
may be holding at the moment, but if euro inflation data come in
stronger than expected and US indicators
due next week worsen, then investors are calling for the euro/dollar
cross to breach the $1.60 level.
Attention
today will turn to May eurozone purchasing manager indexes due around
9.00am—which are expected to
have little change from previous.
Data at 9.00am: French PMI, German PMI and Eurozone PMI.
General Euro Currency News:
• Minutes from the Bank of Japan’s last meeting showed that they are
likely to abandon a two-year bias
towards rate hikes. The BoJ Governor Masaaki Shirakawa also put emphasis
on the growing downside
risks—effectively signalling the BoJ’s shift to a neural policy stance.
An increased appetite in risk has
also seen investors sell the low yielding yen and invest in higher
yielding currencies.
• Oil has slipped off its highs of yesterday to trade at $131.07 after
profit taking.
Thursday 22nd May 2008 Interbank GB POUNDS / EURO 1.2589 EURO / GB POUND 0.7944
Bank of England minutes reveal the vote was 8—1 to keep rates on
hold.
Pounds:
Sterling weakened off yesterday straight after the German Ifo data was
released and lost over 1 cent against
the euro. The pound did make some of those losses back after the Bank of
England revealed that it voted
eight to one to hold rates at 5% at its last meeting, to keep inflation
at bay. It seems that any hope of a rate
cut by the central bank have been dashed, or at least put back till
after the summer.
After the fed released
their minutes, the pound rallied against the greenback and we have seen
cable push through the $1.97 level
to hit $1.9755 in this mornings trade.
Data at 9.30am: Retail Sales expected at –0.5% from –0.4% previous.
Euros:
The euro rallied yesterday as economic data released from
Germany pushed the single currency to a four
week high against the dollar. The single currency moved from $1.5640 to
trade at $1.58 this morning.
Against sterling there was over a cent gained to hit 0.8031, but has
lost some ground in this mornings trade
to be around the 0.80 level.
German Ifo business sentiment rebounded a
bit in May after dropping in April,
and confidence about the next six months also rose.
The business climate
index rose to 103.5 in May, beating
economists expectations of 101.9. Some analysts are saying strength in
the Ifo and the relentless increase in
oil prices are shifting the Monetary policy debate towards considering
interest rate hikes.
Data at 9.00am: Italian Consumer Confidence expected at 99.4 from 99.8
previous.
General Euro Currency News:
• Oil smashed past $135 a barrel for the first time as it continued its
astonishing rise, following unexpected
declines in US crude and gasoline stocks in a tight market. Oil hit
$135.04 before falling back
slightly to $134.45 a barrel.
• Gold is up $3.70 at $935.50 per troy ounce in tow with rising crude
oil.
• The Canadian dollar has made strong gains as it continues its push
against the pound and the US dollar.
The continuing rally in oil has benefited the loonie and the currency
shows no signs of letting up in
its gains.
Wednesday 21st May 2008 Interbank GB POUNDS / EURO 1.2550 EURO / GB POUND 0.7968
Shortage fears push spot oil price to $129.60 per barrel.
Pounds:
It was a quiet day on the data front yesterday as we saw sterling was
trade sideways against the euro although
sterling has weakened off against the euro this morning after better
than expected German Ifo data
was released at 9.00am.
The focus over the last few days has really been
looking towards today’s release of
the minutes of the Bank of England’s Monetary Policy Committee’s May
meeting, when UK interest rates were
left on hold at 5.00%. According to independent think tank the institute
for fiscal studies, eighteen million
families will be worse off after April 2009 budget when temporary tax
concessions expire, when they will
loose, on average £150.00 per year.
Data at 9.30am: Bank of England
Minutes.
Euros:
The euro rose to a three week high against the dollar
after another record oil price was hit and after the president
of a prominent German think tank suggested the European Central Bank
could hike interest rates. We
saw the euro gain 0.3% against the dollar to hit $1.5632 this morning,
but the single currency remained unchanged
against sterling.
Data out yesterday saw the ZEW German economic
sentiment indicator fall slightly,
defying economists expectations for a rebound, and the economic momentum
is likely to loose speed because
of increasing refinancing costs and a strong euro.
Investors will be
keeping a close eye on more data to be
released today, with the key German Ifo survey due at 9.00am. Markets
consider the Ifo survey to be a better
indicator of Germany’s economy because it is the survey of business
sentiment rather than investor sentiment.
Data at 9.00am: German Ifo expected at 102 from 102.4 previous.
General Euro Currency News:
• Fears of a shortage within five years propelled long term oil futures
prices to almost $140 a barrel.
Investors rushed to buy oil futures contracts as far forward as December
2016, pushing their prices as
high as $139.50 a barrel, up more than $9.50 on the day. The spot price
hit a record $129.60 a barrel.
• Iceland’s $20 billion economy has come under intense pressure in
recent months as global credit conditions
tighten, helping send the
Danish krona down by nearly half against the euro
since midsummer.
• The Rand weakened off across the board yesterday, with a full per cent
drop against the pound as violence
flared on its borders with Zimbabwe.
Tuesday 20th May 2008 Interbank GB POUNDS / EURO 1.2545 EURO / GB POUND 0.7971
Bradford & Bingleys shares slump to record low fears on mortgage
market.
Pounds:
Sterling had a pretty non eventful day yesterday as the major currency
crosses held in very tight ranges.
Sterling is only off 1 pip against the euro from yesterdays opening and
5 pips away against cable.
Tomorrow’s
attention will be drawn towards the Bank of England minutes due at
9.30am. Key economic data in the eurozone today as well will be closely monitored for any indication for
the short term strength for the single
currency against the pound.
No economic data today.
Euros:
The euro is slightly higher against the dollar this
morning, and it could rise if the German ZEW data show improvements
in economic expectations, but its gains are likely limited, according to
RBS strategist Masafumi
Yamamoto. A slight improvement in economic expectations is likely to
cause temporary
buying of the euro.
German’s ZEW indicator of economic sentiment among financial analysts
and institutional investors is due at
10.00am, followed by the Ifo report on German business confidence
tomorrow at 9.00am. The two German
reports may prove instrumental in determining the next turning point in
the euro, according to chief FX
strategist Ashraf Laidi at CMC Markets. German producer prices rose
faster than expected in April, mostly due
to sharply higher energy prices, with the month on month figures coming
in at 1.1% from an expected 0.5%.
Data at 10.00am: German ZEW expected at –37.0 from –40.7, Eurozone ZEW
expec –44.2 from –44.8.
General Euro Currency News:
• The Reserve Bank of Australia left the door open to tighter policy
settings, saying a further interest
rate hike was discussed at length at its May 6th board meeting, with
rates left unchanged at a 12 year
high of 7.25%. According to JP Morgan economist Helen kevans “At this
stage we think the RBA is
firmly on hold, but without any further signs of easing domestic demand
there is a possibility that the
rates will need to go higher later in the year”.
• Oil prices are higher at $127.24 as continuing concerns over tight
supplies overshadowed the impact of
a move by oil kingpin Saudi Arabia to boost output.
• Bradford & Bingley’s shares slumped to a record low amid fresh fears
about the mortgage market.
Monday 19th May 2008 Interbank GB POUNDS / EURO 1.2546 EURO / GB POUND 0.7970
Average asking price for home in UK hits highest level in almost
six years.
Pounds:
In the UK, if recent surveys by industrial bodies are anything to go by,
official data this week should show
retail sales weakened further in April. A combination of cold weather
and a jump in inflation which further
squeezed house hold budgets will not of helped.
The average asking price
for a home in the UK hit its highest
level in almost six years in May even though a sharp drop in
availability of mortgages has weighed on the
market in recent months, Rightmove said Monday. Even though the BoE has
cut interest rates 75 basis
points to 5.0% since December, lenders haven’t reduced their mortgage
rates in tandem due to the turmoil in
financial markets.
No data today.
Euros:
In the eurozone, the first estimates of May’s eurozone
purchasing managers indexes are due this week, with
economists expecting the readings to edge mostly lower, as well as
highlight the divergence between the
region’s major economies. PMI data due on Friday is expected to show
softer growth ahead.
Other key data to
be released this week to keep an eye on will be Germany’s ZEW survey due
Tuesday, and Ifo report due
Wednesday.
Data due at 10.00am: Eurozone Construction Output YoY expected at –0.1%
from 0.1% previous.
General Euro Currency News:
• Oil is up 28 cents at $126.57 per barrel, stretching gains from Friday
as upward momentum proves
unrelenting. The market ignored news that Saudi Arabia raised oil
production by 300,000b/d from May
10th
• The Canadian dollar made gains on Friday, riding on the back of rising
oil prices, as the loonie pushed
through parity against its neighbour the US dollar.
Friday 16th May 2008 Interbank GB POUNDS / EURO 1.2584 EURO / GB POUND 0.7946
The pound is up slightly against the euro.
Pounds:
The pound is up slightly against the euro this morning, and held steady
against the dollar. The pound is still
reeling from the Bank of England Governor Mervyn King’s admission that
he was forced to admit earlier this week that further rate cuts aren’t
on the immediate agenda in the UK. This is despite the continued flow of
data showing UK house prices are tumbling at rates not seen for at least
20 years and that consumer activity is tailing off.
No data today.
Euros:
The strongest reading for 12 years of German gross
domestic product growth, up 1.5% quarter –on-quarter,
seems likely to strengthen the European Central Bank’s argument for
keeping rates on hold at 4%. “The ECB
is in no position to cut interest rates unless growth slows more
sharply,” according to Kenneth Broux, economist
at Lloyds TSB Corporate Markets.
Analysts are also expecting a slowdown
in growth later this year. Leading
indicators are pointing to more moderate growth and business surveys are
coming down.
Data at 9.00am: Italian Trade Balance Total euros expec –860.0M from
–408.0M.
General Euro Currency News:
• Oil rose 64 cents to $124.76, still well off its record high of
$126.98 a barrel earlier this week.
• Stronger than expected Japanese growth data gave the yen a small boost
against the dollar in Asian
trade Friday. But traders said the yen’s appreciation may have no
staying power given Japan’s low
interest rates and murky economic outlook. Yet growing fears of
inflation around the globe have given
rise to a shift in market perceptions about the Bank of Japan’s monetary
policy direction, with an interest
rate hike increasingly seen as the likely next step.
• New Zealand retail sales are plummeting, indicating an unexpectedly
sharp dive in the economy,
weakening the
New Zealand dollar.
Thursday 15th May 2008 Interbank GB POUNDS / EURO 1.2535 EURO / GB POUND 0.7977
BoE warns that UK interest rates may not be cut for another 2 years.
Pounds:
Sterling had a poor day yesterday after the Bank of England acknowledged
a stagflationary predicament.
Warnings also came that Britain should not expect another cut in UK
interest rates for at least two years as it warned that inflation would
rise far above its previous forecasts and persist at levels well above
the governments
target until early 2010.
The blame for higher inflation lays with
surging energy prices, along with
higher import prices resulting from falls in the value of sterling. The
pound fell to a 4 month low against the
US dollar but kept pretty stable against the euro, although the pound has
weakened off against the single currency
this morning, trading around 1.2526.
No data today
Euros:
The euro took a backseat yesterday and was little changed
against the dollar and the pound. We have seen a
slight move in the favour of the single currency against the dollar this
morning as the euro has gained a full
cent back against the greenback.
Data released this morning showed
German economic growth surged in the
first quarter from the last quarter of 2007, but analysts caution the
rebound may not last.
1stQ GDP growth
jumped 1.5% from the Q4 and the German economy has shown itself to be
very robust. French GDP grew
0.6% in the three months to March 31 and rose 2.2% on the year. The
markets were expecting only a 0.4%
increase on the quarter and 1.9% on the year.
No Data today.
General Euro Currency News:
• Oil was lower yesterday after an unexpectedly small rise in US crude
stocks, with June Nymex trading
at $123.79 per barrel.
• Iceland’s economy is taking a beating from the credit crises, with its
currency plunging and inflation
and interest rates soaring. That has the country’s policy makers
starting to discuss something once
unthinkable — seeking refuge by tying their economy more closely to the
European Union and the eurozone.
Wednesday 14th May 2008 Interbank GB POUNDS / EURO 1.2582 EURO / GB POUND 0.7952
UK CPI shows inflation accelerates at sharpest pace in almost six
years.
Pounds:
The latest reading of UK consumer price inflation shocked markets
yesterday. UK CPI rose to 3.0% in April
from 2.5%. The reading had a negative effect on the pound and all
European markets, as this leaves the Bank
of England in a tough position, similar to the ECB, with growth slowing
and inflation rising. Analysts now think
it will be difficult for the Monetary Policy Committee in the UK to cut
rates with inflation at these levels. Now
this usually would lend some support to the pound, as a hold in rates is
usually seen as positive for that
currency,
but as the economy seems to be going from bad to worse, this is having a
detrimental effect on sterling.
Looking ahead to today, the Bank of England will issue its inflation
report which is due at 10.30am.
Data at 9.30am: Jobless Claims expected at 0.0% from –1.2%, Claimant
Count Rate expected at 2.5% unchanged,
ILO Earnings expected at 5.2% unchanged, Avg Earnings expected at 3.7%
unchanged and at
10.30am the BoE Quarterly Inflation Report.
Euros:
The euro is slightly lower today against the dollar and
the key level of $1.54 is looking more likely to be
breached sooner rather than later. We don’t think this means an end
to the strength of the euro but just a
slight move in strength in the favour of the dollar.
Inflation worries in the eurozone are keeping the European Central
Bank from cutting rates and this is leading to support for the
single currency.
Against the pound we are seeing the euro relatively unchanged as
consistently poor economic data from the UK is weighing heavily on
sterling.
Data at 10.00am: Eurozone Industrial Production YoY expected at 2.3%
from 3.1% previous.
General Euro Currency News:
• Oil hit more record highs against late last night to near $127 per
barrel, on concerns Iran may consider
cutting oil production.
• Gold is up 50 cents at $866.60, following its overnight tumble. Gold
is following the US dollar
for now, rather than oil. The next level of support is $845, but some
analysts are looking for $800.
• Alliance & Leicester shares tumbled 10pc as rumours they are to pull
£4bn of capacity out of the UK’s already undersupplied
mortgage market heaps more misery
on home buyers in the UK.
Tuesday 13th May 2008 Interbank GB POUNDS / EURO 1.2565 EURO / GB POUND 0.7959
Sentiment in UK housing market at its lowest level in more than 30
years.
Pounds:
The pound had a rollercoaster ride yesterday, starting the week off
against the euro just over 1.26, but then
benefiting from stronger than expected Producer Price Index data which
came out at 9.30am, and pushed the
pound up to reach just over 1.27. The index showed that producer prises
rose at their fastest pace on record
during April, rising 2.4%, well above the forecast of 2.0%. Records
began for this index in 1986.
Sterling rallied
with this news as inflation has been a key factor in stopping the Bank
of England in drastically cutting
interest rates, and these figure may have dashed any hopes for a cut
next month. The pound then lost its
gains later in the evening as the RICS data was released, showing
sentiment in the housing market deteriorated
to its weakest level in more than 30 years in April. The RICS data
showed the index falling to –95.1
from an expected –80. There was more gloomy news as UK retail sales
experienced their largest year on year
fall for three years in April.
Euros:
The euro has held firm against the greenback after its
losses over the last week. Key economic data from
both the eurozone and the US will give investors an idea of any future
monetary stance from both central
banks. A key level for investors looks likely to be around $1.5600, with
a move up towards $1.56 should that
level be breached.
Against the pound the euro made gains of around 1
cent as we saw a rise from 0.7936 to
reach 0.7954 this morning, due to weak economic data from the UK.
General Euro Currency News:
• Oil prices are lower today, trading below $124 as profit taking helped
cool a red-hot market. It is seen
that oil prices have simply risen too far and too fast over a short
period of time with really no reasons
driving the rally, other than investor and technical interest, now
trading at $123.50 per barrel.
• Gold was down 50 cents today to be trading at $881.70 per troy ounce
after a decline in demand from jewellers.
Monday 12th May 2008 Interbank GB POUNDS / EURO 1.2643 EURO / GB POUND 0.7909
CPI report due this week in UK may show BoE to breach inflation
target.
Pounds:
The pound has held its ground against the euro over the weekend but
dropped slightly against the dollar.
Looking ahead to this week, the Bank of England will admit for the first
time that it is set to breach its inflation
target in the coming months and warn that Britain is destined for two
years of soaring costs and weak
growth. Mervyn King, the Banks Governor, is poised to unveil new
forecast showing that the Consumer Price
Index (CPI) will rise above 3 per cent over the next six months, forcing
him to write a letter of explanation to
the Chancellor. In a further blow to Alistair Darling’s credibility, the
Bank will cut its economic growth forecasts
for both this year and next.
Data at 9.30am: PPI Output YoY expec 6.4% from 6.2% previous, Visible
Trade Balance expec –7.500B from
–7.487B. At 11.01PM BRC Retail Sales Monitor and RICS House Price
Balance.
Euros:
The single currency has continued to loose its grip on
the dollar with just over half a cent lost over the weekend.
Continuing speculation that the eurozone is yet to see the worst from
the credit crunch, while the US is
seen to have got through the rough period relatively ok.
Economists
expect the European Central Bank to
begin to cut the cost of borrowing in the third quarter, lagging behind
moves by the US and Britain.
Interest
rates in the eurozone economies are at 4 per cent. Jean-Claude Trichet,
the ECB president has given warning
about the inflationary risks of soaring food prices worldwide and has
said that financial market speculators
may be to blame for the rising cost of grains and dairy produce.
Data at 9.00am: Italian Industrial Production mom expec at 0.0% from
–0.2% previous.
General Euro Currency News:
• Bank of Japan Governor Masaaki Shirakawa has said that there is a need
to raise interest rates if the
worlds second largest economy continues its recovery in the long run,
but reiterated that downside
risks remain in the near term.
• World oil prices eased on Monday in Asian trade but remained above
$125 a barrel after an inflow of
investment funds and supply worries helped push costs to another record
high, now $125.40/barrel.
Friday 9th May 2008 Interbank GB POUNDS / EURO 1.2631 EURO / GB POUND 0.7937
Bank of England keeps rates on hold at 5.00%
Pounds:
In mid morning trade yesterday we saw a rally from the pound against
both the euro and the dollar as the
markets anticipated the interest rate decision by the Bank of England.
The central bank left interest rates
unchanged which was widely expected, although there was an outside
chance of a rate cut.
The pound gained
around half a cent against the dollar to break through $1.96 but has
lost some of those gains this morning.
Against the euro there was a similar story, a small gain in the run up
to the rate decision, but then as the ECB
also left rates on hold, the pound gave up its gains almost immediately
and is finishing up the week at a low
of 1.2632.
No data today.
Euros:
The euro had a good day against the dollar yesterday and
has continued to push upwards against the greenback
this morning.
The European Central Bank kept interest rates unchanged at
4.00% and the rhetoric from
the accompanying statement by ECB president Jean Claude Trichet didn’t
really signal anything different on
their views of how the economy is performing.
We have seen a gain of
over 1 cent against the dollar from
$1.5328 to be trading at $1.5446 this morning, although market sentiment
does seem to lead towards a
stronger dollar.
Against sterling we saw the euro weaken in the run up
to the rate decision in the UK, but as
the ECB also left rates unchanged, the single currency made back those
losses and has rallied this morning to
0.7911.
General Euro Currency News:
• Oil hit another record high today as we saw $124.70 hit in Asian
trade.
• The yen strengthened slightly yesterday as carry trade positions were
unwound, due to investors risk
tolerance decreasing and shunning the higher yielding currencies. We saw
a cent loss on USD—Yen
and 1 % gain in the favour of the Yen against the pound.
Thursday 8th May 2008 Interbank GB POUNDS / EURO 1.2738 EURO / GB POUND 0.7850
BoE expected to leave rates unchanged at 5.00% -slim chance of cut.
Pounds:
Sterling had a mixed day yesterday as we saw the pound fall to a 3 month
low against the dollar, but make a
small gain against the euro. Around 1 cent was lost on cable since
yesterday, pushing the pound under the
$1.96 level to reach $1.9537 this morning.
Against the euro there was a
small gain of 0.7% as the pound
pushed over the 1.27 level to be trading at 1.2732.
UK manufacturing
output in the UK contracted in March
and was lower than expected. Output fell 0.5% on the month and rose 0.6%
from March 2007, below expectations
which were flat for the month and a rise by 1.2% in annual terms.
The
Bank of England is expected
the leave interest rates unchanged at 5.00% today, but a series of soft
data in the run-up to the decision has
meant markets now see an outside chance of the Monetary Policy Committee
making its first back to back
rate cut since 2001.
Data at 12.00: Bank of England Rate Decision
Euros:
The euro came off badly yesterday against a basket of
currencies and looks like finishing the week on a low.
Against the dollar we saw a significant move in the favour of the
greenback with a six week low breached,
and the single currency also dropped against the pound as we saw weak
economic data released from the
eurozone.
German manufacturing orders fell unexpectedly fell a monthly
0.6% in March due to weaker eurozone,
as well as domestic, demand. The fourth consecutive monthly decline
defied economists expectations of
a 0.2% increase and fuels fears the Europe's largest economy is facing
weaker growth ahead.
Data at 12.45: European Central Bank Rate Decision
General Euro Currency News:
• World Oil prices continued their daily record breaking run today,
nearly breaching $1.24 per barrel,
despite a larger than expected rise in US crude stocks. The high was
$1.2387 and some investors are
pointing towards $150 per barrel in the coming months.
• The New Zealand dollar weakened off slightly after data showed the
number of jobs in New Zealand
fell at the fastest rate for 19 years in the March quarter as the
economy slowed sharply.
Wednesday 7th May 2008 Interbank GB POUNDS / EURO 1.2655 EURO / GB POUND 0.7902
Consumer confidence in UK plunges to lowest level on record.
Pounds:
Nationwide Building Society released a confidence survey last night
which showed UK consumer confidence
had plunged to its lowest levels on record, as the United Kingdom’s
economic prospects worsen. The survey
for April fell to 70, the lowest figure since polling began in May 2004,
and accelerating the survey’s downward
trend of recent months.
Nationwide also said consumer sentiment could
worsen further in the months to come
as food and fuel prices continue to rise. This combined with the
continuing economic crises in the UK could
sway the Bank of England towards a back to back interest rate cut
tomorrow, which would be the first time in
seven years.
Experts said the purchasing managers index had fallen so
far that the Bank’s Monetary Policy
Committee looks increasingly likely to reduce borrowing costs tomorrow.
Data at 9.30am: Industrial Production MoM expected at –0.1% from 0.3%
previous
Euros:
The euro was stuck in a range against the dollar
yesterday as investors look towards the central banks interest
rate decision and following press conference tomorrow. The markets are
widely expecting the ECB to
leave interest rates unchanged at 4.00% and as usual, will look towards
the press conference for any change
in rhetoric with regards to the central banks policy for future rate
meetings.
The single currency did make a
small gain against the pound as poor economic data weighed heavily on
sterling, from 0.7832 to 0.7903.
Data at 10.00am: Eurozone Retail Sales MoM expected at 0.1% from –0.5%
previous.
General Euro Currency News:
• The Aussie dollar is trading around record levels against the US
dollar as the Aussie dollar continues to
benefit on the back of high domestic interest rates and strong commodity
prices.
• Oil hit another all time high yesterday to trade at $122.73 per barrel
before dropping back to $121.80.
The continuing rising prices seemed to be helped by concerns over supply
in key producer Nigeria.
• Gold is up 90 cents at $876.5, off its earlier high Wednesday of
$881.40.
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.
