Euro news:
The euro took another blow as Moody’s downgraded Ireland’s credit rating, citing “gradual but significant loss of financial strength”. Initially this sent the euro lower as traders favoured stronger currencies such as the dollar, the euro briefly dipping into the €1.28 level. However, such is the confidence in the single currency right now that trading has moved up to $1.2982. The euro continues to cap Sterling gains with Sterling inching ever lower. Trading now shows a -0.13% move lower with €1.1790/1.1800 now the next support level for Sterling. This move lower is now a 1 ½ month low for Sterling against the single currency.
The dollar is also coming under pressure for the time being, the euro trading higher but gains thus far remain subdued. The next test for the euro comes in the form of the stress test results for euro zone banks. Rumours so far have hinted that the banks are not in dire straits but these rumours have come from those who wish to instill a sense of calm; EU finance ministers.
An interesting article in the Guardian suggests that a number of German, Spanish and Greek banks will be forced to raise further capital in order to appease the regulators.
Pound news:
Thursday and Friday saw Sterling slip against the euro as the €1.19 level was breached leading the way for further losses into the €1.18 level. The Pound finally came to a rest at €1.1839 at 16:30 on Friday as €1.20 appeared to be simply too much for Sterling to hold. Trading ranges today have been very tight with Sterling moving within a 40pip range, the high of the day so far just €1.1867. Should the euro zone continue to win the sentiment of investors then €1.17 is the next level to watch out for on the downside.
GBP/USD is doing slightly better, the dollar has given little away over the weekend but Sterling has moved higher to trade at $1.5340 on the market. Momentum to the upside should see $1.5350 as the next short term level. Sterling may find moving to $1.54 difficult as better-than-expected U.S corporate earnings from the U.S have supported the dollar.
Against the Aussie dollar trading is somewhat muted but AUD $1.7592 is still a respectable level for the Pound. In terms of macroeconomic data last week was not too bad for Sterling as unemployment figures beat market expectations and noting came in worse than expected. Monday is a very quiet day generally for any data but Wednesday is the next scheduled release for high impact U.K data.
US Dollar news:
Trading this morning appears to be relatively calm as percentage changes for the day so far are pretty insignificant. Sterling is moving higher against the dollar by 0.15% but the weekend has not moved the currency pair as the current price, $1.5319, is a few pips higher then where we left it on Friday.
The euro is also edging higher having slipped in very early morning trading after Moody’s cut Ireland’s rating from Aa1 to Aa2. The price on the market of $1.2958 is an improvement from $1.2928 by Friday’s close, a day when we also saw $1.30. If upside momentum can continue then the dollar may lose ground as the euro pushes back towards $1.30. Trading for the dollar is mixed this morning with the commodity lead currencies taking no particular direction so far, AUD is showing no change whilst NZD is down -0.12%. The Canadian dollar is pushing higher but $0.9491 may seem a bit disappointing for the currency that once hit parity with the Greenback.
A broader outlook for the dollar suggests some downward pressure as the U.S recovery begins to lose momentum whilst issues in the euro zone appear to be stabilising. “Certainly there is an increasing view among investors that evidence (shows) the U.S. economic recovery is losing momentum… (This) should be seen as a U.S. dollar-negative, especially after the stabilization of the euro,” said Mike Jones, currency strategist at the Bank of New Zealand.