US Dollar news:
Generally speaking the dollar is up this morning as the markets are undecided in where to place their bets ahead of the EU bank stress test. We are seeing mixed trading this morning as some are favouring the dollar as the safest place to be, betting that the stress test will highlight some serious cracks in the system whilst others are moving out of the dollar as the U.S economy leads the way in the recovery lurching to a halt.
The opinions that the euro has been overdone sees the single currency slip to $1.2794, this is actually a move higher for the day so far but a dip from $1.2817 yesterday. Sterling is very much in the same boat, the day’s change shows a 0.18% gain on the Greenback but the price on the market shows a slip from yesterdays $1.520, $1.5188 your price to buy now. The Yen has gained half a percent on the US Dollar, the Yen being viewed as the last resort safe haven despite their huge deficit and lagging economy.
Against the commodity lead currencies the dollar finds itself losing ground to Australian Dollar, New Zealand Dollar and Canadian Dollar however the moves lower have been contained to less than -0.35% thus far. Yesterday was a quiet day on the macroeconomic front but today sees a wealth of data including existing home sale and unemployment claims as well as Federal Reserve Chairman Ben Bernanke testifying before the House Financial Services Committee, in Washington DC.
Pound news:
The spotlight has now moved on from being on the U.K. We have had our election and the emergency budget has been and gone. In terms of Forex this now means that Sterling has been rising and falling in line with market sentiment surrounding the euro and dollar. As sentiment improved for the euro Sterling initially rallied off the back of this new found confidence. How ever, as the outlook improved for the euro yet further still we saw Sterling slump as investors favoured the single currency. Now, Sterling finds itself edging lower after Bernanke’s comments dampened risk appetite.
Unfortunately, the minutes from the MPC meeting saw rates unchanged, as was to be expected, but also no one new joined Andrew Sentance in voting for a rate hike. Sterling now finds itself back in the €1.18 level having briefly crept into €1.1905, €1.1868 is the current price to buy on the market.
U.K retail sales out at 09:30 could move Sterling but a break and hold of €1.19 looks optimistic for the time being. The U.S dollar is starting to slip and a look at the markets shows Sterling has moved back to a $1.5210 price. This is a move for the good for GBP/USD but $1.52 is not a level to get too excited about, a look back at the last two weeks shows Sterling has hovered at this price for some time.
Euro news:
The euro has started the day relatively unchanged against Sterling and the dollar. Against Sterling a price of 1.1866 is pretty much flat versus the price last night whilst early trading saw the euro slump below $1.28 but has since recovered. A snap shot of the market shows that the euro is currently undergoing a slight rally back to $1.2816 which is exactly where we left it at 16:30 yesterday.
The main driving force for the euro, and in fact a key turning point for the euro, will be the results of the stress test. EU Commissioner Oliver Rehn has announced that the tests will be an accurate portrayal of EU bank health; the markets remain sceptical. So far this morning the euro has received support as manufacturing data for Germany and the euro zone as a whole comes out better than expected. It will be interesting to watch the markets today and tomorrow as the actual results for the EU bank stress tests are due to be released at 17:00 London time on Friday, after markets are shut.
Quote of the Day
“Self-reliance is the only road to true freedom, and being one’s own person is its ultimate reward.” – Patricia Sampson