Pound news:
The pound seems to be unable to hold strong levels as it moves lower this morning against both the euro and Sterling. As of late GBP/EUR trading has been very uneventful, the highs of €1.2385 last week have been and gone and Sterling seems to have settled in the 1.2000 – 1.2020 region for today. So far Sterling has just pushed into positive territory, registering a 0.04% gain which puts the price on the market at €1.2000. With no data to move either currency forecast for release we are likely to see Sterling bounce above and below €1.20 today.
Some technical analysis suggests the pound could gain toward $1.55, a level last seen in April, although the move may be slow. “A cluster of resistance levels between $1.5200 and $1.5525 might limit the upside for much of this month,” Mizuho analyst Nicole Elliott said. Against the Australian dollar Sterling is starting to move lower from the rather impressive price of Australian Dollar $1.82 that we saw on Thursday.
Today Sterling has moved up 0.43% to $1.7838 but is still a little way off getting back over $1.80. The main culprit for the move lower is the performance of U.K shares. A 1% fall took the steam out of the rally that saw $1.52 and €1.2385. “UK numbers have started to disappoint recently … post election/budget positives worn off,” said a London-based trader.
US Dollar news:
The dollar is trading within tight ranges as there was little to move the markets yesterday and the same can be said for today. As such any changes are likely to be driven by changes in sentiment as the market weighs up the outlook for the global economy. For the time being the outlook does not look too good, thus the dollar is creeping up against its major traded pairs.
Sterling is lower by -0.40% and well below the $1.52 levels seen yesterday, the euro is also creeping lower today but has maintained a price of $1.2570 so far. The commodity lead currencies are now on the back foot as they trade lower, AUD, Canadian Dollar and New Zealand Dollar being highly sensitive to changes in sentiment towards global growth forecasts. However, thin trading volumes for today means the losses are not cause for concern, the Canadian dollar down -0.33% and very much caught in the $0.9450 area. There is absolutely no data to speak of for the U.S, as Matthew Strauss RBC Senior Currency Strategist puts it “The day ahead is filled with trivial data releases that would, at best, provide only short-term distractions,” he said.
Euro news:
The euro is starting to reverse any gains as concerns about the global recovery now take centre stage for traders and investors. The big winner is the Yen which is up 0.89% for the day versus the euro. Likewise the dollar, also a safe haven currency, is also trading higher against the euro. At the moment the performance of stock markets are determining the general perception of risk sentiment, “Whether or not the euro can extend these gains from current levels this week depends on the overall level of risk aversion.
The better tone of stocks…weighs in favour of the euro,” Jane Foley, analyst at online trading firm Forex.com, said. The bond market is also one to watch as bond prices start to tick higher on the back of risk aversion. For the time being the euro has continued to hold above $1.2550, analysts have suggested that this is a high level for EUR/USD but as of yet no-one has called the high for the euro. ECB President Jean-Claude Trichet is to hold a news conference on Thursday and according to Mizuho Corporate Bank market economist Daisuke Karakama “The euro could start another round of falls depending on comments by Trichet although I believe the euro has already fallen enough”.
Quote of the Day
“Tell me and I forget; show me and I remember; involve me and I understand”. – Anon