US Dollar news:
The threat of the U.S heading back into recession is weighing heavily on the minds of analysts and as such the bias is leaning towards selling the dollar. “The U.S. economy appears to be losing momentum, and that’s supporting the euro,” said Lee Hardman, a currency strategist at Bank of Tokyo Mitsubishi UFJ Ltd. in London. “Conditions following the stress tests have become more supportive for risk assets. That’s detrimental for safe-haven currencies.”
The euro is pushing ahead, $1.3028 is now the price on the market which would suggest that momentum has seen the single currency hold above $1.30 as 16:30 London time yesterday saw the euro trade at $1.3004. Sterling is also gaining on the back of dollar weakness as the Pound cements itself in the $1.56 level at $1.5628 and up 0.21% so far.
The commodity lead currencies are mixed this morning as Australian Dollar recovers some lost ground to trade up 0.79% but New Zealand Dollar has edged lower by -0.18%. The Canadian dollar is the stronger of the two dollar currencies as it moves 0.32% up today but remains trading at $0.9661. Yesterday was not so promising on the macroeconomic front as core durable goods orders came in down -0.6% when the market was looking for the same figure but to the positive. Unemployment claims are due 13:30 London time, this figure is a w/w number but still has the potential to move the market.
Pound news:
I shall start with news on GBP/USD as it is proving to be a more favourable trading partner for the Pound. Yesterday Sterling was trading just inside the $1.56 level and this morning reveals that the markets still prefer the Pound as we trade up 0.14% on the day and at $1.5617 on the market. This $1.56 level is by no means guaranteed so we may see Sterling trade either side of $1.56 before the markets decide on an appropriate price.
GBP/EUR on the other hand is doing very little, Sterling finds itself down -0.21% on the day but in a very familiar price level; €1.1973 is the bid on the market. Yesterday did look promising as the Pound hit €1.20 on a couple of occasions but having done so it retreated almost immediately. As the equity markets shut Sterling was trading at €1.2008 but the momentum that got Sterling there has all but dissipated this morning.
Comments from BoE’s Mervyn King did little to help the Pound, the theme of yesterday’s speech centred on doing everything to stimulate the economy which means low rates and possible further quantitative easing measures. The Pound is up on the US dollar due to broad U.S weakness as there is little reason for Sterling to rally, the Nationwide House Price Index proved to be of little help as the number came in at -0.5% with expectations at -0.2%.
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Euro news:
Just as the markets adjust to a more stable euro zone the single currency finds itself climbing ever higher on the dollar as economic weakness in the U.S gives traders no reason to buy the dollar in favour of the euro. The euro has now moved ahead by over 0.60% on the day and is set to test $1.3080 if upside momentum continues. The rally against the dollar is also helping the single currency move higher against other major trading partners, namely the Pound. So long as markets look favourably on the euro the Pound will have trouble taking the upper hand in trading. The current price is now starting to edge lower towards the €1.1950 area, unfortunately this level has been par for the course for July.
Just to rain on the euro’s parade, an interesting article in The Telegraph highlights that despite their perceived health the European banks have amassed €30 trillion in liabilities with a serious funding threat looming. The single currency is by no means out of the woods just yet.
Quote of the Day
“Learn as if you were going to live forever. Live as if you were going to die tomorrow.” – Anon.