Currency Market Updates

What’s With The Euro Dollar?

The problems of Greece are the central focus of the Eurozone just now. The pound is taking a bashing all around and concerns in the US have been over the shaky greenback. Amidst all this activity the EUR/USD has been ignored a little of late. So what’s with the euro dollar relationship right now?

The new year started in the belief that the dollar would suffer at the hands of the euro but the reverse has proved to be true. The euro has turned out to be even weaker than the US dollar as it moved to levels not seen since May of 2009.

The PIGS of Europe (Portugal,Ireland,Greece and Spain) have all had a hand in this turn of events so what’s with the euro dollar relationship?

Was the conventional thinking wrong or did the market get it right? If you take a few minutes to take a look at this new video you can see that we may be at a tipping point where conventional thinking could well be wrong again.

Good Trading,

Tom

Currency Market Updates by Tom Nadir

The contents of this report are for information purposes only.

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Can The Pound Pick Up?

Currency Market News on Sterling, a UK Hung Parliament and RBA Interest Rates

2, March 2010

After being sold aggressively across the markets yesterday, can the pound pick up? The markets have taken a breather and we now await the next move. First let us dissect why the drop in sterling which fell over 2% against the USD pushing it to a 10 month low.

Well the focus is political with the opinion polls over the weekend indicating that the chances of a hung parliament were much higher. So why does this cause a problem? A hung parliament may actually prove successful, however the markets do not like uncertainty and the consensus is that a coalition government will have less political clout to push through the decisive decisions especially in relation to tough fiscal planning which is inevitable.

The Conservatives have come out of the traps today stating that protecting the AAA status is central to their plans. However, some feel their proposed aggressive cuts will be detrimental to recovery. On the other hand Labour propose to wait and cut later but waiting too long could mean that the horse has already bolted and the AAA rating could be lost. So this uncertainty and division is leading to a weaker pound.

Yes this could be good for the UK economy and for recovery but there is a fine line between a weaker pound and the loss of confidence in Sterling and the UK economy. This would lead to a sharp rise in import prices and inflationary pressure especially if commodity prices remain high, which is not good. This would spill into a pressure on the UK gilt markets and inevitably the UK losing the AAA rating adding yet more pressure.

So you can see the problem that uncertainty is creating. The pound needs to get back above the psychological 1.50 level against the USD The Times summed up the weakness in the pound by empasizing its 7% drop since the beginning of February against the Zimbabwe Dollar!

Sterling also lost yesterday on the purchase by Prudential of AIG’s Asian business which led to further selling of GBP and buying of the USD in the light of this purchase.

In other news the RBA raised interest rates by 25 basis points to 4%- giving further strength to the Aussie dollar. the AUD still the darling of the currencies and expected to strengthen further against the major currencies going forward.

Report by Phil McHugh

Currency Market Updates by Tom Nadir

Contact Currencies Direct for Corporate or Private Transactions. Open an account today and save money.

Currencies Direct & Forex trading

Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct’s head office and global trading centre is based in the City of London.

The contents of this report are for information purposes only.

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Pound Is Pummeled

Currency Market News on the Pummeled Pound, a Hung Parliament and Greece…of course

1, March 2010

Disastrous start as the pound is pummeled in the FX markets continuing the bearish trend witnessed last week. The pound has dropped to a near 3 month low against the euro, a 10 month low against the USD and a near year low against the Yen. The UK is under heavy selling pressure with unwanted attention and unease with the fiscal deficit combined with further indications that the general election will result in a hung parliament.

A hung parliament would severely limit the ability of a divided parliament to act decisively on the UK’s deficit spelling danger for sterling. In addition to this the potential purchase of the Asian life insurance unit of AIG from Prudential is causing large negative M&A flows out of sterling and into the USD. So all in all not a bright picture for the pound which is looking alarmingly fragile and dropping sharply.

Lots on the table this week for economic data with interest rate decisions in Australia, UK, Canada and Europe. The expectation is for another rise in Australia of 25 basis points. We will also have feedback from all major economies in relation to PMI data which will give a good gauge on the services and manufacturing sectors.

The Greece situation is still ongoing. A few rumblings of solutions have dissolved into nothing leaving the markets still uncertain and leaning to the safe havens of the USD, the Yen and the Aussie dollar performing well on the hint of another rate rise.

Report by Phil McHugh

Currency Market Updates by Tom Nadir

Contact Currencies Direct for Corporate or Private Transactions. Open an account today and save money.

Currencies Direct & Forex trading

Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct’s head office and global trading centre is based in the City of London.

The contents of this report are for information purposes only.

BlogCatalog – Finance

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Pound Sell Off Continues

Currency Market News on Falling Sterling, UK House Prices and The Greek Situation

26, February 2010

Let us start with the good news from the UK economy before we dive into the bad and the ugly. UK CBI distributive trades showed a good rise in the number of retailers expecting an increase in sales. The number was up from -8 to +23. John Lewis says weekly department sales up 15.1% so good feedback there.

UK GDP revision for the fourth quarter came in at 0.3% and upward revision from 0.1%- better than expected. The pound sell off continues but why has the pound dropped further?

I was bemused on the fall in the pound following the upward revision. I can only attribute it to speculators thinking the data would be stronger than 0.3% and buying the rumour and then selling the fact. Sterling has had a mini run lower over the last week falling 3% against the euro, 2% against the USD and 4% on the Yen.

Mixed economic data will not be helping, particularly UK investment data which was appalling, dropping 5.8% in the last quarter to leave the year on year figure down a whopping 24.1%. In addition Nationwide house price data came in weaker than expected at -1.0% much weaker than the forecasted +0.4%.

News from Greece continued to spread fears of contagion through Europe. The talk of a possible downgrade of the Greek sovereign rating, along with their onerous funding programme, provoked a surge in the country’s bond yields as well as comments from other European worthies.

Remember that a downgrade from current levels would remove Greece’s ability to enter into repurchase agreements with the ECB using their bonds thus cutting off access to the underlying cheap funding. The Greek PM is talking tough stating that those responsible for the crisis must pay and now is the time for decisions and actions for the country.

The mood of fear is still driving the USD and JPY higher.

Report by Phil McHugh

Currency Market Updates by Tom Nadir

Contact Currencies Direct for Corporate or Private Transactions. Open an account today and save money.

Currencies Direct & Forex trading

Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct’s head office and global trading centre is based in the City of London.

The contents of this report are for information purposes only.

BlogCatalog – Finance

Filed Under Currency Market News, Currency Market Updates, currencies direct | Leave a Comment

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