Euro Pounds Daily brief Tuesday 21 November 2006

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Tuesdays 21/11/2006


• Euro hits fresh high versus Yen
• ECB’s Trichet positive on global growth, warns on inflation
• Fed’s Fisher: Rate hikes may be needed
• Thin market liquidity ahead of holidays
• Oil prices firm on OPEC
• UK market awaits BoE minutes


US Dollar:


The dollar traded in a fairly benign range yesterday and in early trade today. Liquidity is thin in the
markets as traders wind down ahead of Thursday’s US and Japanese holidays.
A large market order knocked the dollar in early trade however comments made by the Fed’s Fisher
that he is ‘comfortable with current interest rates’ with October inflation easing, but stressed that the
‘FOMC would respond to any inflation rebound’.
Today we see the release of the Redbook Average and US state unemployment.


Pound:


Sterling had a fairly quiet day on the forex markets yesterday as no data was released to add any spice
and traders brace themselves for the Bank of England’s minutes for the November rate meeting. The
market is expecting eight of the nine members to have voted for a 0.25% increase. Anything else may
have an effect on sterling. Traders will be looking for any comments for the future path of interest
rates, particularly in early 2007.


Euro:


The euro hit a record high against the yen as ministers at the annual G20 meeting failed to address the
weakness of the yen. The Japanese currency is used to fund carry trades, borrowing at a low interest
rate to invest in higher yielding assets elsewhere.
Trichet reminded investors that the ECB remain ‘strongly vigilant’ on inflation risks. Despite these
comments, euro strength has failed to feed through to the sterling-euro cross.


General News:


• Oil prices spiked upwards in early trade as Asian investors speculated on ongoing OPEC cuts and
on rumours of an Alaskan output shortage. Currently trading $58.80.
• Metal prices were up again driven by Platinum as rumours flooded the market about the introduction
of an exchange traded fund.
• The London Stock Exchange rebuffed the Nasdaq’s final £2.7bn offer to buy them out with the
board saying the bid is so undervalued, the company board is unwilling to meet for further discussions.


Inter-bank
Updated 21/11/2006
 
GB POUND/US DOLLAR- 1.8971
GB POUNDS / EURO 1.4793
EUR/USD 1.2823
GBP/JPY 224.05
GBP/AUD 2.4673
GBP/NZD 2.8301
GBP/ZAR 13.6686
GBP/CHF 2.3570
GBP/CAD 2.1749
GBP/SGD 2.9522
GBP/THB 69.345
GBP/HKD 14.7711
 


 

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