Cypriot banks reopen | Smart Daily Currency Note
This week (Last week)
GBP/EUR – 1.1838 (GBP/EUR – 1.1758)
GBP/USD – 1.5148 (GBP/USD – 1.5178)
EUR/GBP – 0.8445 (EUR/GBP – 0.8500)
EUR/USD – 1.2786 (EUR/USD – 1.2896)
GBP/AED – 5.5642 (GBP/AED – 5.5782)
GBP/AUD – 1.4532 (GBP/AUD – 1.4558)
GBP/CAD – 1.5412 (GBP/CAD – 1.5586)
GBP/CHF – 1.4412 (GBP/CHF – 1.4362)
GBP/HKD – 11.7540 (GBP/HKD – 11.7782)
GBP/INR – 82.28 (GBP/INR – 82.48)
GBP/JPY – 142.86 (GBP/JPY – 143.72)
GBP/NZD – 1.8087 (GBP/NZD – 1.8248)
GBP/SEK – 9.8687 (GBP/SEK – 9.8430)
GBP/ZAR – 14.0182 (GBP/ZAR – 14.1512)
Sterling had a good week against the euro, rising to a two month high of 1.1850 yesterday due to the shocking developments that have occurred in Cyprus over the past week and a half. Sterling did lose ground against the US dollar and struggled against a number of its other peers as several pieces of weak data were released and due to some analysts feeling that sterling had been “overbought” recently. The CBI’s sales report described flat trading volumes throughout March, the number of new mortgages approved increased by less than expected and yesterday the current account figures showed the trade gap had widened yet again. Today sees the nationwide house price index release with a forecast of another rise of 0.2% and a report on consumer confidence. These will be closely watched this month due to the current situation in the country. There is bank holiday in UK tomorrow and on Monday which brings decreased liquidity to the markets and in turn can lead to over-exaggerated moves in the market. Get in touch today for an up to the second exchange rates and the latest news.
The short week this week has been dominated by a small island in the Mediterranean. Huge uncertainty has weighed on the euro, dragging it to well below 1.28 against the US dollar, and over 1.18 against the pound. Political gridlock in Italy compounded market nervousness leading to disappointing results at the Italian Bond Auction. The paradox for the euro as banks reopen in Cyprus today, is that a euro in a German account is worth more than one in a Cypriot one, while a euro in cash on Cyprus is worth more than anywhere else. Today we have German retail sales and unemployment data which traders will keep a close eye on due to Germanys status as the economic powerhouse of Europe. While capital flow controls will be implemented to stop all money being pulled out of Cyprus at once, over the long weekend we should see things balance out again. Get in touch now for the latest developments, and up to the second prices.
The US dollar had a fairly strong start to the week as risk aversion dominated trading patterns due to the continuing European uncertainty meaning FX investors were buying safe-haven currencies. The US dollar continued to strengthen in spite of new home sales and consumer confidence coming in worse than forecast, whilst the monthly figures for durable goods orders showed a better than expected increase. Yesterday saw the release of pending home sales statistics which came in slightly under forecast and are seen a good indicator of the how the housing market is going to behave over the next few months. Today we see the release of the weekly unemployment claims data and the final GDP reading for the fourth quarter of 2012 which is expected to show modest growth of 0.5%. On Friday the US will release revised consumer sentiment figures and on Monday Manufacturing Purchasing Managers’ Index (PMI) data will give a clear indication of the state of the manufacturing sector in the US. Get in touch for the latest rates.
Elsewhere, the Japanese yen has continued to strengthen this week as investors seek safer havens for their money, although it showed signs of levelling out yesterday in response to the Governor of the Bank of Japan’s announcement that he aims to achieve 2% inflation targets in 2 years. Traders look set to continue selling yen as Japan presses ahead with its ultra-loose monetary policy. Additionally, various data, including figures concerning manufacturing, is set to be released between now and Monday, which may also have a bearing on performance. The approval of a $100 billion fund by leaders from the BRICS nations may have significant long-term implications for the currencies of those nations. This is meant to serve a similar purpose to that of the IMF and should it be successful could provide effective liquidity support and boost confidence in the BRICS currencies. Today sees the release of monthly Canadian GDP data, which may give the currency a boost if we see some growth. This evening we will have inflation data out of Japan and on Monday Chinese manufacturing PMI will be the headline release. Call in now for live rates and up to the minute information.
A quieter day for currencies | Smart Daily Currency Note
GBP/EUR – 1.1808
GBP/USD – 1.5154
EUR/GBP – 0.8468
EUR/USD – 1.2824
GBP/AED – 5.5658
GBP/AUD – 1.4489
GBP/CAD – 1.5432
GBP/CHF – 1.4418
GBP/CNY – 9.41
GBP/HKD – 11.7662
GBP/HUF – 359.78
GBP/INR – 82.18
GBP/JPY – 143.61
GBP/NZD – 1.8092
GBP/RUB – 46.83
GBP/SEK – 9.8472
GBP/ZAR – 14.0631
Sterling eased from close to a six week high against the euro and dropped against the US dollar yesterday, as a timely reminder to investors about Britain’s cloudy economic forecast came in the form of the CBI’s sales report. Indeed, the country’s flat retail sector had a noticeable effect with sterling dipping to 1.5135 after the report which described flat trading volumes throughout March. Furthermore, some analysts feel that sterling has been somewhat “overbought” recently following the scraps of positive economic data in Britain and the problems in the Eurozone; as a result, the theory is the underlying problems in the UK are now resurfacing and in turn could push sterling lower. The disparity in economic prospects compared to America means sterling will struggle against the US dollar as the recovery in the US starts to solidify. The Federal Reserve could stop purchases of further assets later this year, but in contrast the Bank of England is likely to instigate another wave of quantitative easing given the government has meagre fiscal leverage with its austerity commitments. Out today we have the final GDP reading for the fourth quarter of 2012 which is expected to show a contraction of 0.3% and current account figures which are forecast to show the trade gap has widened yet again. Call in now for the latest update from your trader.
It was a much better day for the euro yesterday, but only to the point that it didn’t lose any further ground against its major trading partners after reaching a four month low against the US dollar. This increased stability came as the Cypriot Finance Minister played down talk of an unprecedented exit from the Eurozone. Those banks which have survived are expected to reopen tomorrow, but be subject to capital movement limitations – in theory temporarily – to prevent all capital flooding out of the country. With little data released today, it will continue to be Cyprus dominating the landscape, with markets still weighing up the precedent value of the bailout. The Italian bond auction will serve as a very good barometer of opinion, expect the euro to remain weak as long as it appears as unstable a prospect as it does at the moment. Get in touch today for up to the second pricing, and the latest news.
Despite a variety of data coming out of the world’s largest economy yesterday, the US dollar remained relatively stable. Very little movement was seen against the euro whilst the US dollar strengthened slightly against sterling. Data concerning new home sales and consumer confidence came in worse than forecast, whilst the monthly figures for durable goods orders showed a better than expected increase. The lack of significant movement may in part be due to traders being preoccupied by events in the Eurozone. Monthly data regarding pending home sales in the US is set to be released today and the markets may also be affected by the release of crude oil inventories and the two speeches by bank officials who may give a clearer indication of the Federal Reserve’s intended monetary policy going forwards. Call in now for live rates and up to the minute information.
Elsewhere, the Japanese yen suffered yesterday following comments from the incoming Bank of Japan Governor who signalled his intentions to an ultra-loose monetary policy which will devalue the yen. The Australian dollar performed well yesterday – reaching a two month high against the US dollar – as speculation on further interest rates cuts waned as the Governor of the Reserve Bank made no hints towards further easing. Today Japan’s retail sales are expected to rise to 0.9% in February from a fall of 1.1% in January. We will also see business confidence data from New Zealand whilst in the evening we will have inflation data released from Canada with a forecasted rise of 0.3%. Get in touch now for the latest news and rates on your currency.
Cyprus unsettles the euro | Smart Daily Currency Note
GBP/USD – 1.5172
EUR/GBP – 0.8478
EUR/USD – 1.2858
GBP/AED – 5.5695
GBP/AUD – 1.4491
GBP/CAD – 1.5482
GBP/CHF – 1.4408
GBP/CNY – 9.41
GBP/HKD – 11.7682
GBP/HUF – 359.62
GBP/INR – 82.08
GBP/JPY – 143.02
GBP/NZD – 1.8154
GBP/RUB – 46.83
GBP/SEK – 9.8714
GBP/ZAR – 14.0892
Yesterday was a mixed day for sterling with gains on some fronts and losses on others. It made further gains against the euro, reaching a six week high of 1.1820 following comments from the head of the Eurogroup of Eurozone finance ministers who suggested that many countries needing a bail out would follow the Cyprus model of a tax on bank deposits. On the other front, sterling lost ground against the US dollar as data released showed that the number of new mortgages approved for home purchase in UK fell below the market estimate. Today the Chancellor will testify on the 2013 Budget to the Treasury Select Committee, but his comments are not expected to cause any big disruption to the markets. We also have realised sales figures which are predicted to rebound this month after the indicator came out worse than expected in February. Call in today for the latest updates on sterling.
Cypriot lawmakers reached an agreement with the Eurozone finance ministers very early Monday morning to approve the bailout. In return for the ten billion euro loan from the IMF, the second biggest bank in Cyprus will be wound up, and deposits of over 100,000 euros will be subject to a compulsory one off levy. The Dutch Finance minister said yesterday that the model should be applied to the rest of the Eurozone leading to speculation that raiding banks would be a condition for any further bailouts – to such an extent that two major Italian banks halted trading of their shares after prices plummeted by over 5%. The uncertainty drove the euro down to a four month low against the US dollar, losing two cents very quickly as it headed towards 1.284. It also hit a six week low against sterling and has settled around 1.18 overnight. The euro has certainly been undermined by recent events but the weakness could be fleeting as volatility reduces. Call in now for the latest news and developments, and for an up to the second rate on the euro.
The US dollar had a strong day yesterday, up against all of its major peers except the Japanese Yen. This strength was as a result of a risk averse market with investors looking to purchase safe-haven currencies, as market uncertainty continues to dominate the markets in response to the situation in Europe. Today is an interesting day for the US Dollar, as three important pieces of data are released. Firstly, the monthly Core Durable Goods statistics, which is a leading indicator for manufacturing, is forecast to show a drop in growth of just 0.7%. We also have consumer confidence figures and statistics on the number of new home sold in the last month. These are all key indicators for the state of the economy in the US and will be watched closely by investors. Stay tuned for the latest rates.
Elsewhere, the Japanese yen had a steady start to the day before strengthening in the afternoon and making considerable gains against its major peers. The positive performance may have been aided by the resurgence of risk aversion as faith in the Eurozone is yet to be restored. On-going performance is likely to be affected by the Governor of the Bank of Japan’s speech today as he sets out his plans for the central banks ultra-loose monetary policy. The Australian dollar made some gains early in the day, but these were largely cancelled out by a poorer performance in the afternoon. The Governor of the Reserve Bank of Australia will be speaking in Sydney today and traders will analyse this in order to predict the central bank’s monetary policy decisions going forwards. Additionally, the biannual financial stability review released later on in the day may display further hints surrounding future monetary policy. Call in now for live rates and up to date information.
Cyprus back from the brink | Smart Daily Currency Note
GBP/EUR – 1.1714
GBP/USD – 1.5221
EUR/GBP – 0.8535
EUR/USD – 1.2982
GBP/AED – 5.5881
GBP/AUD – 1.4561
GBP/CAD – 1.5581
GBP/CHF – 1.4324
GBP/CNY – 9.44
GBP/HKD – 11.8122
GBP/HUF – 359.52
GBP/INR – 82.26
GBP/JPY – 144.12
GBP/NZD – 1.8246
GBP/RUB – 46.82
GBP/SEK – 9.8356
GBP/ZAR – 14.0926
Sterling had a mixed day on Friday, falling from its five week high against the euro, as an injection of confidence into the 17 nation currency came as a result of Cyprus moving closer to reaching a bailout agreement. It is a fairly quiet week on the data front in the UK with the main release being the quarterly release of current account statistics, showing the difference in value between imported and exported goods, which will undoubtedly have an impact on the markets. Other data released this week includes a raft of housing related data including the monthly change in the number of new mortgages approved for home purchase and the change in the selling price of homes with mortgages. We also have the Chancellor speaking, the Bank of England’s quarterly report on the current level of credit in the UK and the final GDP reading for the fourth quarter of 2012 which is expected to show a contraction of 0.3%. This, combined with the developments in Cyprus, is likely to make it an interesting week for sterling. Get in touch for the latest rates.
Friday saw some mild improvements for the euro, ending an extremely bad week for the 17 nation currency. Although German data on the Business Climate in the country came out with a disappointing set of figures, we saw the euro rise against all of its major peers for the first time in a week based on optimism of resolving the situation in Cyprus. Over the weekend, a deal principal appears to have been struck between Cyprus and the Troika helping the euro back over the 1.30 level against the US dollar. This deal will now go to Brussels, as it needs to be signed off by the Eurogroup finance ministers. This week see’s a lot of data released including consumer climate figures, the monthly retail sales data and the change in unemployment in Germany. There has been a raft of poor data out of Europe recently so analysts will pay close attention to see if this weeks figures follow suit. We also have an Italian 10-year bond auction which will be closely scrutinised as Italy has still not formed a Government following the recent elections. The outrage in Cyprus and speculations on contagion effects and a potential bank run continue to be a threat for the Euro Area as a whole, so call in today for the latest update from your trader.
The US dollar ended last week fairly poorly as it lost ground against the majority of its major peers on Friday. Most notably significant ground was lost against the euro and the rate managed to rise back above 1.30 for a brief period. There was no significant data released affecting the currency directly so its performance was largely defined by developments in the UK and the on-going situation in Cyprus and the waning of risk aversion, which had previously swept the market. However, this week sees a number of events concerning the world’s largest economy, which are likely to impact on the US dollar’s performance. The Chairman of the Federal Reserve will be coming to London early in the week to take part in a panel event and his words are likely to affect trading. Additionally, a variety of other data is set to be released throughout the week including figures concerning home sales, consumer confidence and unemployment claims. Call in now for live rates and up to date information.
Elsewhere, the biggest loser on Friday was the South African rand, continuing its slump to hit seven week lows against sterling suffering in the risk averse market brought on by the situation in Cyprus. The Australian dollar traded close to recent highs as speculation dropped that the Reserve Bank would cut interest rates, the truth could be spelt out when the Governor speaks on Tuesday. After two strong weeks for the Japanese yen on the back of signs that the weak currency plan is working, it will be interesting to see whether traders let the Bank of Japan drive the currency further down to the targeted level of 100 against the dollar. Get in touch now for the latest news and rates on your currency.
Sterling benefits from Cyprus uncertainty | Smart Daily Currency Note
This week (Last week)
GBP/EUR – 1.1758 (GBP/EUR – 1.1608)
GBP/USD – 1.5178 (GBP/USD – 1.5131)
EUR/GBP – 0.8500 (EUR/GBP – 0.8610)
EUR/USD – 1.2896 (EUR/USD – 1.3032)
GBP/AED – 5.5782 (GBP/AED – 5.5557)
GBP/AUD – 1.4558 (GBP/AUD – 1.4586)
GBP/CAD – 1.5586 (GBP/CAD – 1.5455)
GBP/CHF – 1.4362 (GBP/CHF – 1.4306)
GBP/HKD – 11.7782 (GBP/HKD – 11.7337)
GBP/INR – 82.48 (GBP/INR – 81.92)
GBP/JPY – 143.72 (GBP/JPY – 145.32)
GBP/NZD – 1.8248 (GBP/NZD – 1.8394)
GBP/SEK – 9.8430 (GBP/SEK – 9.7052)
GBP/ZAR – 14.1512 (GBP/ZAR – 13.8254)
Sterling has had a good week and for the second week in a row it is at a higher level against the euro and the US dollar than it was at the start. It made gains against the majority of its major counterparts including reaching a five week high of 1.1775 against the euro and a one month high of 1.52 against the US dollar. On a very busy week for the UK, we saw the latest Monetary Policy Committee (MPC) meeting minutes reveal that there was no change in the number of members voting for an increase in quantitative easing which helped sterling as there were murmurs that another member may have voted in favour. George Osborne’s relatively neutral budget did include some reforms which pleased the market such as the 1% cut to corporation tax, as well as national insurance relief for small businesses; however, this was marred by the Office for Budgetary Responsibility released some daunting figures showing national debt continuing to rise until 2018 and will reach 85% of GDP. The budget also included a new remit for the Bank of England saying that the 2% inflation target is "necessary but not sufficient", and that Mark Carney’s bank should be able to focus on growth as well as inflation, much as the American Federal Reserve does. Yesterday saw another lift for sterling as retails sales figures came out much better than forecast showing a sharp rise to 2.1% compared to the 0.6% forecast, and the first month of positive growth in the sector since October. Moreover, we also saw better than expected public finances figures which must have pleased the Chancellor! There is very little expected to be released from the UK today; but, with the situation in Cyprus far from resolved, it is still likely to be an interesting day for sterling. Get in touch for the latest rates.
News and speculation surrounding the Cypriot bailout have had a significant negative impact on the euro this week. Despite a reasonable performance on Wednesday due to hopes that an agreement with the ECB might be reached, this week has seen the euro lose considerable ground against the majority of its major peers. It was traded at almost its lowest rate in four months against the US dollar as it hovered around the 1.29 level. The 17-nation currency was hampered further by worse than expected manufacturing and services data coming from France and Germany. Whilst Cyprus accounts for only half a per cent of the Eurozone’s economic activity the uncertainty surrounding its future does not bode well for the single currency. The ECB have given Cyprus until Monday to raise the capital required for the bailout agreement, whilst there have also been rumours surrounding possible financial aid from Russia. Today sees the release of the usually influential Institute for Economic Research German survey, but equally any updates from Cyprus could also have a big impact on the strength of the euro. Call in now for live rates and up to date information.
The US dollar has performed well this week as risk related flow has caused investors to buy US dollars as a safe haven currency helping the US dollar reach a four month high against the euro. The Federal Bank voted to keep interest rates and quantitative easing on hold this week; but, left the stimulus tap wide open for further easing in spite of recent encouraging developments on the domestic economic front. The current asset purchase program will continue at the previous $85 billion monthly rate for now. Furthermore, we saw the Federal Open Market Committee lower its near-term outlook for GDP growth to 2.8% from 3.0%.Other data released included building permits figures, Philly manufacturing index and unemployment clams which all came out slightly better than forecast; but, existing home sales fell slightly short of market estimates. There is no significant data due to be released today, as a result, you can expect the US dollar to trade more on general market sentiment and you would imagine any dramatic price action would be as a result of developments in Cyprus. Call in now for an update on how the US dollar is trading.
Elsewhere, the Japanese yen has performed well this week due to people turning back to safe haven currencies and shrugged off data showing a trade deficit for the eighth month in a row. The continued trade deficit supports the Bank of Japan’s current monetary policy, weakening the yen to help boost exports. The New Zealand dollar had a strong end to the weak after much better than expected GDP data was released showing growth of 1.5% when only 0.9% had been anticipated – the fastest pace for four years. The South African rand continued to suffer reaching a fresh four year low against sterling and the US dollar as a state-owned electricity company began implementing rolling blackouts across the country and the countries central bank said they would not intervene in the rands recent declines. The Canadian dollar strengthened the most in a week against the US dollar yesterday due to improved retail sales from the previous months drop, showing that the economy is slowly recovering. The Hungarian forint also had a strong week amidst rumours that Hungary will avoid dramatic policy measures to help foreign-currency debtors. Call in now for a live price and a market update.
A neutral UK budget helps sterling | Smart Daily Currency Note
GBP/EUR – 1.1696
GBP/USD – 1.5114
EUR/GBP – 0.8548
EUR/USD – 1.2921
GBP/AED – 5.5556
GBP/AUD – 1.4578
GBP/CAD – 1.5494
GBP/CHF – 1.4291
GBP/CNY – 9.38
GBP/HKD – 11.7345
GBP/HUF – 356.51
GBP/INR – 81.99
GBP/JPY – 145.03
GBP/NZD – 1.8274
GBP/RUB – 46.78
GBP/SEK – 9.7680
GBP/ZAR – 14.1232
In arguably the biggest sterling news day of the year we saw a one-and-a-half cent range for sterling as it reacted to the day’s events as they unfolded. Prior to the release of the minutes from this month’s Monetary Policy Committee (MPC) meeting sterling weakened as there was a belief they would support further quantitative easing. That belief was misplaced, and the early sterling losses were more than undone by a one cent jump in rates. Then budget concern kicked in to undo the gains, but the concern was also misplaced. In his speech George Osborne announced that the Office for Budgetary Responsibility forecast that the UK will leave recession by the end of the year, and set out a budget to drive the growth necessary to do so. He announced a new remit for the Bank of England saying that the 2% inflation target is "necessary but not sufficient", and that Mark Carney’s bank should be able to focus on growth as well as inflation, much as the American Federal Reserve does. The Chancellor announced a 1% cut to corporation tax, as well as national insurance relief for small businesses. The pro-growth, pro-business, budget saw sterling drive back up, and settle at 1.5130 against the US dollar, and 1.1685 against the euro at the close of play in London. Today is unlikely to see the same level of volatility although any news from Cyprus is likely to cause a market reaction, with the only significant UK release being retail sales in the morning and we have to look back as far as October for good news from the retail sector. Get in touch now to discuss the effect of the budget, and to get a live rate.
After a tough few days for the euro, yesterday saw some respite in the decline as the euro strengthened against the US dollar and sterling as solutions for the Cyprus problem still seem possible. The ECB stated that it remained committed to providing liquidity in the troubled state, easing some of the more immediate fears surrounding the Cypriot bailout. After the Cypriot government’s decision to reject the initial bailout proposal, possible solutions have continued to be sought in the form of continuing negotiations to agree a deal with the ECB as well as seeking financial help from Russia. There is still a great deal of uncertainty surrounding how events will unfold and it was recently announced that Cypriot banks will now stay shut until Tuesday 26th to prevent mass withdrawals. Manufacturing data from Germany and France may also have an impact on performance, but is likely to be overshadowed by other events. The euro may weaken further if some sort of agreement is not reached in a timely fashion. All eyes remain on Cyprus. Call in now for live rates and up to date information.
Yesterday was not a good day for the US dollar, declining against all of its major peers – including a drop to 1.2980 against the euro as alternative ideas to the proposed Cypriot bank levy were being discussed whilst reaching new lows against sterling following the release of the Bank of England’s MPC meeting minutes. As widely expected, the Fed decided to leave the stimulus tap wide open for the time being, despite recent encouraging developments on the domestic economic front. The current asset purchase program will continue at the previous $85 billion monthly rate for now. Moreover, we saw modest changes to its near-term outlook for GDP growth, seeing a 2.3 to 2.8% rise on a Q4 to Q4 basis this year, compared to the previous 2.3 to 3..0%. Today will be another busy day for the US dollar with a few important releases bringing the possibility of volatility to the markets. The weekly unemployment claims is forecast to increase along with the existing home sales statistics, whilst the Philly manufacturing index is expected to show a much lower drop in the sentiment. Call in now for a live US dollar rate and a market update.
Elsewhere, the Russian rouble had a strong day yesterday, climbing the most in over two months against the central bank’s USD/EUR basket. This is in part due to a rise in the price of oil and an increase in demand for the rouble for tax receipts. The Hungarian forint strengthened for a second day in a row yesterday following speculation that Hungary will avoid dramatic policy measures to help foreign-currency debtors. Late last night we had the release of GDP data from New Zealand and later on today we will see retail sales data release in Canada. Get in touch for the latest rates.
Cyprus, UK budget – a busy day for news | Smart Daily Currency Note
GBP/EUR – 1.1695
GBP/USD – 1.5095
EUR/GBP – 0.8548
EUR/USD – 1.2902
GBP/AED – 5.5406
GBP/AUD – 1.4542
GBP/CAD – 1.5502
GBP/CHF – 1.4296
GBP/CNY – 9.36
GBP/HKD – 11.7053
GBP/HUF – 357.16
GBP/INR – 81.97
GBP/JPY – 143.89
GBP/NZD – 1.8351
GBP/RUB – 46.65
GBP/SEK – 9.7432
GBP/ZAR – 13.9542
Sterling had a positive day yesterday, in particular against the euro– reaching 1.1750 before retracing as investors are treating sterling as a relative safe haven due to the uncertainty surrounding the events taking place in Cyprus. The inflation data released yesterday will disappoint consumers, showing a small increase to 2.8%, squeezing the general public’s pockets ever more. Wednesday will be an extremely busy day for the UK, with several key releases creating the potential for a great deal of market volatility. The Bank of England’s Monetary Policy Committee minutes released this morning will reveal the outcome of votes from the March meeting. Markets expect an unchanged outcome with 3 members voting for more quantitative easing – should this number increase to 4, you can expect sterling to suffer. We will also have the annual budget from the Chancellor which will be watched closely for any reforms that could boost growth in the UK – however no major change is expected, remaining broadly unchanged relative to the December Statement. Today we will also see a raft of labour related data released, with the overall unemployment rate predicted to remain unchanged at 7.8%, whilst another drop in the number of people claiming unemployment related benefits is expected. Call in now for the latest update.
Contagion is the word on trader’s lips this week, as the chaos in Cyprus threatens the stability of the euro. Rumours were abounding over the resignation of the Finance Minister, highlighting the uncertainty surrounding affairs in the region. The debate ahead of the crucial vote on the IMF bailout began last night with many, including the Minister for Defence, expecting the motion to fail. Yesterday evening we saw this expectation come to pass and parliament rejected the bank levy bill. The rejection of the bailout – some say – amounts to a vote to leave the Eurozone, so the consequences could be dramatic but the market reaction has been muted. While the flexibility shown in regards to the Greek bailout would lead you to believe that Europe would give them a second chance, on-going uncertainty does not bode well for the 17 nation currency either way. After dropping to levels not seen since November yesterday against the US dollar we wait to see how low can the euro go. Get in touch with your trader to find out.
A risk adverse market helped the US dollar to perform relatively well yesterday, in a day that was dominated by news from the Eurozone. As well as making significant gains against the euro, the US dollar also strengthened against the majority of its major peers after building permit data coming in slightly better than forecast. Whilst events surrounding the Cypriot bailout are likely to continue to dominate market chatter, today also sees the Federal bank announce its decision on monetary policy. Whilst no change is expected, the economic predictions regarding inflation and economic growth by the Federal Open Market Committee will be watched closely by market analysts. Call in now for live rates and up to date information.
Elsewhere, the South African rand saw a big slide today, dropping 0.8% against the US dollar bringing its total fall to 8.5% this year. A state-owned electricity company began implementing rolling blackouts across the country, due to concerns over both coal supplies and South Africa’s reserve power margin. Furthermore, market uncertainty following the problems in the Euro zone has led to a general sell-off in high-risk, emerging-market assets, of which the rand is one. Similarly, the Polish zloty had a very weak day, suffering the same affliction as the higher yielding South African rand. Conversely, we saw a very strong day for the Japanese yen as investors bought up safe haven currencies. The Norwegian krone suffered following its central bank all but ruling our an interest rate hike in the near future. Call in now for a live price.
Cyprus shows that politicians never learn | Smart Daily Currency Note
GBP/EUR – 1.1654
GBP/USD – 1.5092
EUR/GBP – 0.8577
EUR/USD – 1.2934
GBP/AED – 5.5424
GBP/AUD – 1.4556
GBP/CAD – 1.5441
GBP/CHF – 1.4302
GBP/CNY – 9.36
GBP/HKD – 11.7082
GBP/HUF – 357.97
GBP/INR – 81.48
GBP/JPY – 144.12
GBP/NZD – 1.8314
GBP/RUB – 46.50
GBP/SEK – 9.7261
GBP/ZAR – 13.8752
Sterling rose against all but three of its 16 major peers yesterday as risk aversion swept through the market. It strengthened the most against the euro reaching a five-week high after the proposed levy on bank deposits in Cyprus was announced. Today we will see a raft of inflation data out of the UK, with Consumer Price Index (CPI) expected to rise to 2.8%, marginally above the 2.7% reading we have seen for the past four months. The Bank of England (BOE) has recently warned that inflation might stay above its 2% target for the next two years. Tomorrow we have the minutes of the last Bank of England meeting released and the UK spring budget. Therefore given what is happening here and elsewhere the likelihood of volatility is high, so please call in today for the latest news from your trader.
The euro had a torrid start to the day yesterday, dropping the most in fourteen months before stabilising in the afternoon. The mass euro sell off followed news over the weekend that Cyprus must raise 5.8. billion euros through taxing deposits in order to secure the 10 billion euros bailout it requires. Yesterdays vote on the tax was delayed until today with Cypriot banks shut until Thursday 20th. Since then, there have been developments and last night the ECB agreed to ease the terms of the levy for smaller depositors; but, stated that the revenue target remains the same. The fear of contagion is evident in the markets and you do wonder if there will be a run of the Cypriot banks once they open for business as savers move their funds elsewhere. This would create another funding crisis for Cyprus. However a former Central Bank of Cyprus governor has highlighted that should parliament vote against the bank levy, it would cause "chaos", which seems likely as at least one major Cypriot bank would more than likely go bust. Economic sentiment data will be released today, but you can expect it to play second string to any news coming from Cyprus. Call in now for the latest update and a live price.
It was a fairly quiet day for the US dollar yesterday with little being released in the way of influential data. The result being that performance was largely dependent on international events elsewhere. Little change was registered against sterling as the rate remained marginally around 1.51; but, we saw a knee jerk reaction against the euro, dropping to 1.2880 before the euro recovered some of these losses later on. Today sees the release of monthly US building permit data, which gives some indication as to what can be expected from the construction industry over the coming months. The data is predicted to show a marginal improvement on last month in line with a gradual US recovery. Call in now for live rates and up to the minute information.
Elsewhere, the Swiss franc and Japanese yen both strengthened yesterday largely based on concerns emerging from Cyprus. The appreciation of the Swiss franc and the Japanese yen came as people turned back to safe haven currencies once more following the new bank levying plans that need to be enforced for Cyprus to receive its bailout funds. The Australian dollar struggled based on a nervy outlook on the situation in Europe whilst traders awaited the minutes from the latest monetary policy meeting from the Reserve Bank of Australia. The Hungarian forint continued its decline following the appointment of the new central bank governor and due to the governments recent comments about reducing the level of private FX debt. Call in now for a live update from the markets.
Cyprus shockwaves undermine the Eurozone | Smart Daily Currency Note
GBP/EUR – 1.1658
GBP/USD – 1.5094
EUR/GBP – 0.8573
EUR/USD – 1.2936
GBP/AED – 5.5387
GBP/AUD – 1.4556
GBP/CAD – 1.5453
GBP/CHF – 1.4248
GBP/CNY – 9.36
GBP/HKD – 11.7041
GBP/HUF – 357.36
GBP/INR – 81.71
GBP/JPY – 143.25
GBP/NZD – 1.8307
GBP/RUB – 46.52
GBP/SEK – 9.7186
GBP/ZAR – 13.8931
Sterling performed relatively well on Friday following comments from the Governor of the Bank of England who said that the central bank is not actively trying to devalue sterling, furthermore stating that he does not think that it will drop much further. It is an extremely important week for sterling with two hugely influential releases in the form of the Chancellors budget and the minutes from the latest Bank of England Monetary Policy Committee (MPC) meeting. The market will look to the meeting minutes to see if any more of the MPC members voted in favour of increasing the current levels of quantitative easing, whilst traders will pay particularly close attention to the Chancellors budget. We also have key inflation data, retail sales figures and statistics showing the change in the number of people claiming unemployment related benefits. With so much happening in the UK this week, there is a high probability of increased volatility and the potential for dramatic downside movements should we see a raft of negativity. Call in now to speak to your trader and to see what you can do to protect yourself from adverse market movement.
The euro has been sold off heavily over the weekend, dropping against all of it major trading partners following the news that the EU and IMF have imposed a one-off levy on all bank customers in Cyprus in the region of 6.75-10% in return for the 10 billion euro bailout. This has caused widespread panic and send shockwaves through the markets, but, the decision to impose the levy still needs to be passed by the Cypriot parliament today – and the markets are nervous that parliament may instead vote to leave the Eurozone. This week’s performance also depends very much on various data released from Germany including the results of the monthly economic sentiment survey and German manufacturing data. We also have services and manufacturing Purchasing Managers’ Index (PMI) data released across Europe which will give further indication of how fragile the regions economy is. Call in now for up to date rates and information.
The US dollar had a poor day on Friday, dropping quite heavily against the majority of its trading partners. This was in part down to the release of the Core CPI inflation data, showing the change in the price of goods and services purchased by consumers remains contained, meaning it is less likely that the central bank will tighten monetary policy in the near term. Other data released showed that both consumer sentiment figures and the empire state manufacturing index came in short of market estimates. This week sees the release of a few important pieces of data. On Tuesday we see the release of building permits statistics – a good gauge for the future of the construction industry. On Wednesday we have the monetary policy decision from the Federal Reserve. No change is expected, but the comments that follow on the quarterly economic projections, showing the predicted levels for inflation and economic growth is likely to cause a reaction in the markets. Other data released this week includes existing home sales, weekly unemployment claims and the Philly manufacturing index. It is set up to be an interesting week for the US dollar, so get in touch for the latest rates.
Elsewhere, the Polish zloty was one of the worst performing currencies on Friday after data released showed that growth was slowing by more than oringinal forecast. In Japan, parliament has now finally approved the three men to head up the Bank of Japan all of who favour loose monetary policy. This weeks main releases includes the minutes from the latest monetary policy meeting from the Reserve Bank of Australia, GDP data from New Zealand and retail sales figures from Canada. Call in now for a live quote.
Is this a short term bounce for sterling? | Smart Daily Currency Note
This week (Last week)
GBP/EUR – 1.1608 (GBP/EUR – 1.1452)
GBP/USD – 1.5131 (GBP/USD – 1.4998)
EUR/GBP – 0.8610 (EUR/GBP – 0.8729)
EUR/USD – 1.3032 (EUR/USD – 1.3084)
GBP/AED – 5.5557 (GBP/AED – 5.5026)
GBP/AUD – 1.4586 (GBP/AUD – 1.4620)
GBP/CAD – 1.54555 (GBP/CAD – 1.5456)
GBP/CHF – 1.4306 (GBP/CHF – 1.4167)
GBP/HKD – 11.7337 (GBP/HKD – 11.6194)
GBP/INR – 81.92 (GBP/INR – 81.42)
GBP/JPY – 145.32 (GBP/JPY – 142.97)
GBP/NZD – 1.8394 (GBP/NZD – 1.8149)
GBP/SEK – 9.7052 (GBP/SEK – 9.4968)
GBP/ZAR – 13.8254 (GBP/ZAR – 13.7078)
I can’t remember when last I was able to write that sterling is at a higher level against both the euro and the US dollar than this time last week. However this was on the back of good US economic news rather than good UK economic news as sterling gained a cent from recent lows, breaking through the 1.51 level against the US dollar and the 1.16 level against the euro. Reports suggesting Qatari officials have held talks about investing in infrastructure projects in the UK also helped. The bad news is that lots of economists are also suggesting that this gain was actually based on investors taking their profits on bets against the pound, and not on any underlying economic strength. As a consequence, the recovery looks fragile; limited support for government policy, the recent credit rating downgrade and speculation that the Bank of England will extend monetary easing all add up to create a poisonous cocktail for sterling. Indeed, HSBC yesterday downgraded their 2014 forecasts for the US dollar rate to 1.46 and the euro to 1.0420. Uncertain times indeed. Get in touch now for the latest news on this recent rally, and for up to the second rates.
It has been a mixed week for the euro, with a mid-week slump causing the euro to trade at well below 1.30 against the recovering US dollar, before regaining some lost ground at the end of the week. Early poor performance was due to a number of factors, among them the failed Italian debt auction and the comments from the German finance minister suggesting that a bailout package for Cyprus would not be agreed until further bank restructuring had occurred. Today, the EU summit goes into its second day of talks and much like yesterday, the discussions will no doubt have an impact on the euro, so keep an eye out for the market reaction. Elsewhere, we will see the release of Consumer Price Index (CPI) data for the past month, illustrating inflation in real terms. The outcomes of this will also be reflected in the markets. Get in touch for the latest rates and up to date information.
The US dollar began the week fairly quietly, that is until very strong retail data was released on Wednesday, giving further backing to a continued US economic recovery, helping boost the US dollar across the board by as much as a cent against the euro and reaching a two and a half hear highs against sterling, The good news has continued through the week with strong employment data released yesterday showing the number of new people claiming unemployment related benefits had risen by less than expected. We also seemed to see a return to US dollar weakness on good economic news and therefore increased risk aversion. It is another busy day for data in the US today with releases including consumer sentiment figures, core inflation data and industrial production statistics. The US dollar has been extremely strong recently; but, was softer yesterday, call in now to see how this trend could continue.
Elsewhere, the Hungarian forint was one of the biggest movers this week due to fears surrounding the actions taken by the new central bank governor over inflation; but, the vice governor of the central bank also stated that the recent weakness was “unwelcome”. The Japanese yen had a busy week recovering from a three and a half year low against the US dollar after the opposition party suggested it would oppose the nomination of Iwata as governor of the Bank of Japan – the upper house vote where the opposition party has the majority is being held today. The Australian dollar performed well yesterday after a strong jobs report was released showing a sharp increase in the number of new people employed in the last month causing unemployment to fall by more than anticipated. The Swiss National bank left its central bank interest rate unchanged and reaffirmed that is will defend the EUR/CHF 1.20 cap with unlimited funds. Call in now for a live quote