Pound news:
Having started the day below $1.50 Sterling rallied through the day to close at $1.5014 yesterday. However, getting to and then over $1.50 looked like hard work as overnight trading saw Sterling climb slightly higher then dip under $1.50. Unfortunately it looks like today will see the Pound bounce either side of $1.50 if it cannot find a clear direction. The current price on the market is $1.4996 and -0.22% down on the day but this could change depending on the consumer price index out at 09:30. High inflation numbers may lead to a rate rise by the BoE. It must be said that an actual rate hike is some way off but even hawkish comments are enough to rally the Pound. This is then followed at 13:30 by MPC member Andrew Sentance speaking, Mr Sentance being the sole MPC member to vote for a rake increase. GBP/EUR is very much unchanged, 16:30 yesterday showed a price of €1.1945 and a current price of €1.1958 shows little activity so far.
Ignoring the blip to €1.3285 two weeks ago, Sterling/euro has traded around this price level for quite some time, trading between the low €1.1920 levels to €1.2110 over the course of last month. All the excitement over the budget has been and gone and the GBP/EUR price reflects all news priced in. Capping any possible gains for Sterling comes in the form of Standard & Poor maintaining their negative outlook for the U.K.
US Dollar news:
The Dollar is pretty much unchanged this morning as there has been little news to move the markets one way or another. Against Sterling the dollar has lost the gains it made yesterday as it concedes the $1.50 level to the Pound. On the market the current price $1.5013 is exactly unchanged from 16:30 yesterday but overnight movements see the dollar up by 0.15%.
The euro is also trading in tight ranges thus far, yesterday saw a close price of $1.2567 and this morning registers a 13 pip difference. The dollar has also found support as second quarter earnings season begins, however, there is a slightly pessimistic outlook for corporate earnings which may cap U.S dollar gains. If euro zone problems continue to weigh heavily and corporate earning disappoint we may actually see the dollar rally hard as investors seek safety in U.S Treasuries.
Against the commodity lead currencies the dollar is moving ahead against Australian Dollar and New Zealand Dollar but the Canadian Dollar has held its own to trade up 0.12% and remain in the $0.9650 level.
Some interesting data out today, 13:30 London time sees the US trade balance. The market is looking for a deficit contraction to -39.3B from -40.3B. No doubt the dollar will rally should the deficit shrink further. The Federal budget is also out at 19:00 London time but this is viewed as having a lesser impact on the markets than that of the trade balance. Nevertheless, it’s still one to keep an eye on.
Euro news:
Today sees Greece go to the money markets as it looks to boost income through a bond issuance. This will be closely watched by the markets as it will accurately gauge the market sentiment towards Greek sovereign debt. If the euro-zone debt auctions go well, and if next week’s bank stress tests satisfy investor appetite for assurance the debt crisis hasn’t infected the region’s banking system, the euro has room to appreciate to $1.30 over the next month, said Dorothea Huttanus, currency analyst at DZ Bank. For the time being the markets are remaining cautious on EUR/USD with the emphasis still on the downside, the currency pair now approaching the lows of the day at $1.2529. 10:00 sees the German ZEW sentiment, this is a marker of economic health complied from investor and analyst sentiment. By virtue of their job they should have a good understanding of the current and near future economic outlook. Interestingly, the debate still continues on the possibility of a euro zone break up, some suggesting it is the only way forward in the long term.
Quote of the Day
“Have a heart that never hardens, a temper that never tires, a touch that never hurts”. – Charles Dickens