Pound Sterling – UK Markets

Sterling currency exchange rates continue to fall this morning despite positive housing figures from Nationwide, with the pound falling against its major currency partners. Sterling is currently valued at 1.62 against the US dollar and 1.13 against the euro.

Further losses for the pound yesterday put sterling’s decline as the longest since January against the single currency. The price of UK bonds fell to a record low and the German IFO business climate improved, pushing the euro even higher against sterling. A correction is expected for the pound at some stage, though when this will occur is difficult to say. Nationwide figures show UK house prices gained 1.6% in August, climbing for the fourth consecutive month, while total business investment is down -10% for the second quarter.

US Dollar – US Markets

US currency exchange rates gained over 1% against the pound yesterday after downbeat US figures limited risk appetite. This morning the US dollar is trading at 0.70 against the euro and 0.61 against the pound, while climbing against its European currency partners.

Markets were underwhelmed yesterday by durable goods orders in the US, which rose 4.9% in July, slightly lower than market expectations. However these figures support the idea that the US is recovering across a wide range of sectors and economists are predicting the world’s largest economy will return to growth in the third quarter. GDP figures for the second quarter and initial jobless claims will be a source of currency volatility today.

Euro – European Markets

Currency exchange rates for the euro remain bullish, with the single currency posting its longest rally against the pound since January. The euro has climbed to 0.87 against the pound and dipped slightly to 1.42 against the US dollar.

German data continues to exceed market expectations with the consumer price index rising 0.3% in August. Positive IFO figures triggered a euro rally yesterday and economists are expecting the German economy to support sustained growth by mid 2010. German consumer confidence this morning rose to a 15-month high and EMU consumer, economic and industrial confidence figures are due tomorrow.

Other Currencies – Highlights

A rise in risk aversion following modest US data limited currency exchange rates for the Australian dollar yesterday, sending the Aussie lower against its major currency partners. A 3.3% rise in Australian business investment in the second quarter has added to the view that Australia is recovering, though the Australian and New Zealand currencies remains particularly susceptible to global risk appetite.

Currency exchange rates for the Japanese yen have climbed this morning, due to increased demand for the safe haven while risk appetite remains weak. Unemployment has risen to 5.5% Japan, while consumer prices are declining and export levels have fallen for ten consecutive months. The Japanese election is due soon and the yen could remain strong in the run up to this.

Pound Sterling – UK Markets

Sterling currency rates touched on a 10-week low against the single currency yesterday, falling to 1.1410 in the midst of weak market sentiment. This morning the pound continues to fall, trading at 1.13 against the euro and 1.63 against the US dollar.

Sterling sentiment remains extremely weak at present, due to the absence of positive UK data and growing levels of government debt. The rise in German business confidence has led to increased pressure on the pound, though economists are speculating this could be positive for sterling as a euro recovery, combined with weak exchange rates will help stimulate UK exports. The next two days are light for UK data with GDP figures released on Friday.

US Dollar – US Markets

The US dollar rose for the fifth consecutive day against the pound, as markets responded favourably to the news that Ben Bernanke would be appointed a second term as Fed chairman. This morning US currency rates are valued at 0.69 versus euro and 0.61 against the pound, while declining against the yen, Australian and New Zealand dollars.

US consumer confidence figures released yesterday show confidence rose for the first time in three months, reaching 54.1 and topping the 50 mark which separates negative from positive data. House prices however, continued to decline, falling 6.1% in the second quarter despite a 0.5% rise in the month to July. Today new home sales figures and durable goods orders will be of interest to US markets.

Euro – European Markets

Euro currency rates have continued to rally this morning, gaining a further 0.3% on the pound and 0.15% on the US dollar. The single currency has also gained against its Asian and European currency partners, touching on 0.84 against the pound and 1.43 against the US dollar.

The German IFO business climate survey has risen to 90.5 in August, while expectations have also risen to 95. The German import price index came in at -0.9% on the month but overall, the euro is stronger due to dramatically improved sentiment in the eurozone. There is no further data in the eurozone today, with economic, consumer and industrial confidence released later in the week.

Other Currencies – Highlights

In Japan export levels have declined in July, falling for the tenth straight month sparking fears that the effects of global stimulus packages may be beginning to wane. Export levels fell 37.5% in July, more than the 36.5% recorded in June. Currency rates for the yen have climbed against the pound, euro and US dollar this morning.

Annual inflation rates in Brazil have slowed for the third consecutive month, prompting speculation that the central bank will keep interest rates low until mid 2010. Currency rates for the Brazilian real fell 1% against the US dollar following the news, and are currently trading at 1.86 per US dollar.

Pound Sterling – UK Markets

Sterling foreign exchange rates are relatively unchanged this morning, slightly down against the US, Australian and Canadian currencies, while recovering some of the ground against the euro lost on Friday. Sterling is currently trading at USD1.64 and EUR1.15.

The Institute of Chartered Accountants has seen confidence among business professionals rise by the largest amount in two years, as the UK is expected to return to growth in the third quarter. The index leapt from -28.2 at the end of March to 4.8 at the end of June. The London FTSE has gained ground following the news. This week is light for UK data, with nationwide house prices released tomorrow.

US Dollar – US Markets

US foreign exchange rates are slightly higher this morning against the yen, euro and pound while declining against its Asian currency partners. The dollar is currently valued at EUR0.69 and GBP0.60.

Comments from Ben Bernanke that growth prospects for the US economy “appear good” helped fuel a rise in risk appetite overnight with Asian markets gaining ground. The pound reached an 11-day high against the dollar last week after US house prices continued to rise for the fifth consecutive month. This week brings more housing data in the US, along with consumer confidence and durable goods orders.

Euro – European Markets

Euro foreign exchange rates are slightly weaker this morning, losing ground against all its major currency partners with the exception of the pound, Swiss franc, yen and South Korean won. The single currency is currently trading at USD1.42 and GBP0.86.

The euro continued is rally in Friday’s trading following news that business expectations in Germany and France rose to their highest level in over two years, supporting the view that their economies are recovering. This morning industrial new orders in the eurozone rose 3.1% in June, while still declining at an annual rate of -25.1%. There is no major data in the eurozone today.

Other Currencies – Highlights

In Asian markets Thailand is the latest country to join the growing list of those emerging from recession. In combination with improved confidence from Ben Bernanke, this has fuelled gains in Asian stock markets this morning, where markets from Hong Kong to South Korea have gained ground.

The Japanese yen has weakened against the euro for the third consecutive day, as growing optimism is capping demand for the safe haven currencies. The yen also declined the most against the Australian and South Korean currencies, and is currently valued at 135.63 per euro.

Pound Sterling – UK Markets

Sterling foreign exchange rates have declined this morning as markets digest the record budget deficit announced yesterday. The pound has declined against its major currency partners, with the exception of the Australian and New Zealand currencies.

New that the UK is running a record budget deficit kept sterling under pressure yesterday, with the pound remaining in low ranges against the euro and US dollar. Rising government debt may have contributed to the MPC decision to increase QE levels by another GBP50 billion and rising retail sales did little to boost investor sentiment. There is no major data in the UK today.

US Dollar – US Markets

US dollar foreign exchange rates received a boost yesterday after negative jobless figures triggered a spike in risk aversion. This morning the US dollar is trading at 0.69 against the euro and 0.60 against the pound.

New jobless claims rose by 576,000 in the week to August 15, more than markets expected which led to a bout of risk aversion yesterday. US dollar gains were trimmed however by the Philadelphia Fed which showed manufacturing in the region expanded for the first time in over a year. This is an important snapshot of the region as a whole. US existing home sales are out this afternoon.

Euro – European Markets

Foreign exchange rates for the euro remain strong this morning, climbing against its major currency partners with the exception of the yen and Swiss franc. The euro is currently valued at 1.42 against the US dollar and 0.86 against the pound.

German PMIs for both manufacturing and services have shown positive results this morning, coming in at 49 and 54 respectively. This is in line with positive German data released earlier in the week, indicating that the eurozone’s largest economy is on the way to economic recovery. PMI’s for the eurozone are slightly worse, coming in just under the 50 mark. There is no further data in the eurozone today.

Other Currencies – Highlights

Foreign exchange rates for the Australian dollar gained nearly a cent against the pound yesterday, after the UK budget deficit came in at a record figure. News that the Philadelphia Fed has expanded helped raise foreign exchange rates for the Aussie and Kiwi currencies, through boosting international risk appetite.

The Canadian dollar has also received a boost after wholesale sales rose 0.6% in June, the first increase in 9 months. Goldman Sachs also recommended buying Canadian dollars against the US in the short term which sent the CAD to a weekly high against the greenback.

Pound Sterling – UK Markets

The pound shed 0.57 pence against the euro yesterday as exchange rates dipped due to investor fears over the state of the UK budget deficit. This morning the pound has continued to decline, falling to 1.63 against the US dollar and 1.15 against the euro.

With government debt currently running at 56% of GDP, there are growing concerns over how the government plans to tackle the massive debt that could prove inflationary. Charles Bean noted that the weak pound is stimulating the economy through improved export prices and this is aiding UK recovery. This morning’s MPC minutes show the committee unanimously voted to leave QE levels unchanged, as they felt the slowing pace of decline meant no further stimulus was necessary in July. The MPC will meet again in August.

US Dollar – US Markets

US dollar exchange rates have strengthened following Bernanke’s speech to Congress yesterday in which he outlined US economic prospects. This morning the dollar has gained against all its major currency partners with the exception of the yen, climbing to 0.70 versus the euro and 0.61 against a weaker pound.

Ben Bernanke gave a cautious assessment of the US economy to Congress yesterday, stating that while there are “tentative signs of recovery” the situation is highly unstable and Fed policy will be focussed on “fostering economic recovery”. He also noted that unemployment will likely remain high into 2011 with a slow and gradual climb out of recession. With no tightening of monetary policy due in the immediate future, risk appetite took a hit, sending the yen and greenback exchange rates higher. The house price index is due today in the US.

Euro – European Markets

Euro exchange rates are mixed this morning, climbing against the higher yielding pound, Australian, New Zealand and Canadian dollars while losing ground to the yen, US dollar and Brazilian real.

Industrial new orders across the eurozone have fallen -0.2% this month, taking the annual rate of decline to -30.1%. This is in line with falling industrial production across the region as recession contracts almost all sectors of the economy. European equities gained 0.8% yesterday and the euro remains firm in the region of 1.42 against the US dollar. There is no further data in the eurozone today with current account figures due tomorrow.

Other Currencies – Highlights

Australian dollar exchange rates reached a one-month high against the pound overnight, as consumer inflation figures slowed to 0.5%, the lowest level in a year. In combination with negative news in the UK, this allowed the Australian dollar to consolidate on the pound. The news also suggests that the Reserve Bank will leave interest rates on hold for some time.

Japanese yen exchange rates have surged overnight, amid concerns over the pace of global economic recovery. The Japanese yen gained the most against the euro, South African rand and British pound as low risk appetite in the market led investors to seek out the safe havens.

Pound Sterling – UK Markets

Sterling foreign exchange rates are mixed this morning, climbing against the US, Canadian dollar and Brazilian real while declining against its European currency partners. The pound is currently valued at 1.63 against the US dollar and 1.16 against the euro.

UK unemployment has climbed to 2.38 million after the biggest quarterly increase on record. ONS statistics show unemployment rose by 281,000 in the three months until May, taking the official rate to 7.6% which is the highest in 10 years. Unemployment in both the US and eurozone is running at 9.5%. Inflation figures yesterday saw the pound strengthen as they added to the view that the Bank of England has room to leave interest rates on hold. There is no further data in the UK today.

US Dollar – US Markets

The US dollar has dropped sharply against the euro this morning, falling 0.6% to 0.71 after the publication of euro inflation figures. The greenback has also weakened against its international currency partners as investors diversify following the equity rally yesterday.

Today US markets are packed with data that will provide a current picture of the US economy and likely affect international foreign exchange rates. US consumer price inflation is due, along with industrial production figures which are expected to decline by -0.9%. This is given the lower number of auto assemblies following the massive downturn in GM and the Chrysler bankruptcy. The FOMC minutes are also due today and this will provide an insight into the Fed’s view of the economy at present.

Euro – European Markets

Euro foreign exchange rates have climbed this morning, breaking through the 1.40 level against the US dollar and rising to 0.85 against the pound. The euro is also stronger against its European currency partners as investors seek an alternative reserve with important US figures due this afternoon.

Consumer prices in the eurozone have fallen for the first time in June, dropping 0.1% from the previous month due to a decline in energy prices and reduced household spending. Despite the falling inflation Eurostat figures show none of the Eastern European nations set to join the eurozone have inflation rates low enough to do so. The maximum current rate for joining the eurozone is 2.6% at present. There is no further data in the eurozone today.

Other Currencies – Highlights

The Bank of Japan has left interest rates unchanged at 0.1% but voted to extend emergency credit programmes until the end of the year to help businesses ride out the recession. Governor Shirakawa said the financial conditions are improving in Japan although confidence remains low and the economy is due to shrink 3.4% this year. The yen has weakened overnight as global confidence improves.

China’s GDP statistics for quarter 2 are out this afternoon. As a key market for commodities and exports, continuing Chinese growth is integral to global economic recovery. Foreign direct investment in China has fallen for the ninth month straight as companies trim budgets to weather the recession.

Pound Sterling – UK Markets

Sterling currency rates have recovered slightly this morning ahead of the Bank of England interest rate decision. The pound has gained against the US dollar and Japanese yen, and is unchanged against the euro, currently trading at 1.15.

Today the MPC voted to keep interest rates on hold at 0.5% and maintain current levels of quantitative easing at GBP125 billion, despite the dire production and GDP figures released in the last week. Bank of England governor King has announced that economic recovery is expected to be a “long hard slog” and more action could be needed to kick-start a sustainable recovery in the UK. This morning’s figures show the UK trade deficit has narrowed to GBP-6.3 billion, the lowest level since June 2006. The interest rate decision is due at noon.

US Dollar – US Markets

US currency rates are mixed this morning as the dollar has gained against its Asian currency partners but weakened against the European currencies. In early trading this morning the dollar lost half a percent against the pound and euro, currently trading at 0.61 and 0.71 respectively.

The IMF released updated forecasts yesterday, revising global growth down to -1.4% this year, with a 2.5% expansion predicted in 2010. The report also announced that recovery in the G8 nations could be quicker than expected and the priority for governments should be devising an exit strategy from stimulus packages, while maintaining low inflation and steady growth. However the largely positive report failed to trigger gains in currency exchange rates, as markets were more interested in the results of the G8 summit. Jobless claims figures are out in the US today.

Euro – European Markets

Currency rates for the euro have strengthened this morning against its international currency partners, gaining 0.5% on the dollar and 0.9% on the yen due to increased risk appetite in the market. The euro is currently valued at 0.86 versus the pound and remains just below the 1.4 level against the US dollar.

The German consumer price index has risen 0.4% on the month for June, completing a surprisingly optimistic picture of the German economy this week. As the largest in the eurozone, a recovery in the German trade and export sector could be instrumental in helping to lift the rest of the euro economy out of recession. The G8 summit continues in Italy today, with economy top of the international agenda and the ECB monthly report is also due today.

Other Currencies – Highlights

Aussie and Kiwi currency rates rose against the euro and pound this morning, boosted by market optimism and the UK interest rate decision. Australian unemployment levels rose in June to 5.8%, a drastic rise from last year’s low of 3.9%. However this failed to disrupt Aussie currency rates too much, as the 21,000 jobs lost was largely in line with market expectations.

Central banks in Chile and Peru are set to cut interest rates today, after annual inflation figures in Chile fell below government targets. Chile has already reduced the base interest rate by 7.5% this year, more than any other central bank as the economy suffers due to declining export prices and reduced consumer demand. Economists are also predicting Peru will reduce its base interest rate to 2.5% for the sixth consecutive month following the affects of recession on the economy.

Pound Sterling – UK markets

The sterling currency rate weakened against the euro on Friday, closing the day at 1.14. In early trading this morning, the pound has risen to 1.15 against the euro and 1.64 against the US dollar. This is the highest level in 2009 for sterling, fuelled by the improvement in global confidence.

Sterling currency rates have climbed across the board this morning, with the pound reaching some of the best currency rates in 2009 against its major currency partners. This positive sentiment is based on the view that decline in the UK economy may be nearing a bottom. The UK PMI for manufacturing released this morning shows an improvement to 45.4, climbing from 43.1 towards 50 which indicates a positive result. The Bank of England’s MPC will meet later this week for an interest rate decision. With rates currently at a record low of 0.5%, no change is expected and any further activity is expected to be based on quantitative easing.

US Dollar – US Markets

The dollar has declined against most of its international currency partners this morning, trading over 1.3% lower against the pound and 0.6% lower against the euro. US currency rates have also sunk over 1.4% against the Australian and New Zealand dollars.

Currency trends for the US dollar are bearish at present and are expected to remain so over the coming month. Weakness in the auto sector is weighing on dollar sentiment and levels of QE in the US are keeping investors uncertain. General Motors, once a symbol of American consumerism and the world’s biggest company, is to declare bankruptcy later in the day. GM is one of the most high profile casualties of the credit crunch and is expected to undergo a short “surgical” bankruptcy with a new “leaner” company to be launched in 60 days. Personal income and consumption figures are due in the US today and these often provide a degree of market volatility as they are closely related to retail sales and consumer confidence.

Euro – European Markets

The euro has also benefitted from a rise in risk appetite internationally, gaining over 0.5% on the dollar to trade at some of the best currency rates this year. The euro is currently valued at 1.42 against the greenback, 0.86 against the pound and 134 against the yen.

After touching on the best currency rates in 2009 against the US dollar on Friday, the euro has continued to gain this morning on the back of improved risk appetite. This is despite the bankruptcy of General Motors which is expected to cost up to 20,000 European jobs. The PMI for manufacturing in both Germany and the eurozone have continued to climb this month, showing a modest improvement in the European manufacturing sector. The EMU unemployment rate is released tomorrow.

Other Currencies – Highlights

The Australian dollar has surged against the pound and US dollar overnight as improved risk appetite and commodity prices support currency rates for the higher yielding currencies. Numbers of new building permits and the RBA interest rate decision for June are due overnight and this could induce some currency volatility for the Aussie dollar.

The Canadian dollar has also gained overnight on the back of more positive market sentiment, climbing nearly one percent on the US currency. Figures released in China overnight indicated a modest expansion in manufacturing activity and this has boosted market sentiment in North America. Canadian GDP figures and industrial product prices are due this afternoon.

Pound Sterling – UK Markets

The pound is trading above 1.54 against the dollar this morning, its highest level in 2009 against the greenback. The pound has also climbed above 1.13 on the euro and is up nearly 1% on the yen as improved risk appetite has stimulated demand for the UK currency.

Sterling exchange rates have improved on the back of global recovery prospects, more positive economic data over the last few months has seen investors begin to diversify their foreign currency reserves leading to improved exchange rates for the pound and euro in particular. Throughout the second half of the year as evidence of recovery begins to emerge, we could see more scope for sterling strength against the yen and US dollar. This morning the UK consumer price index has risen by 0.2% for April, climbing 2.3% on the year while the retail price index has also climbed in April, by 0.1%. Profits at retail giant have declined by GBP400 million and the company has slashed its shareholder dividend by one third. UK retail sales figures are due later in the week with the Bank of England minutes out tomorrow.

US Dollar – US Markets

The dollar has weakened against the pound and euro overnight and is trading at lower levels against a basket of international currency partners this morning as improved economic data supports the view that the global economy is stabilizing.

A speech from Treasury secretary Geithner in which he commented that the US economy had stabilised prompted a rally in equity markets yesterday. This boosted currency exchange rates for the higher yielding currencies at the expense of the safe haven dollar and yen. This morning, news that Goldman Sachs, Morgan Stanley and JP Morgan Chase & Co. are planning a USD45 billion refund to the government has added to the view that the banking sector is beginning to recover. US housing starts are due out today and are expected to show an improvement in April as the slump in house prices is beginning to generate buyer interest. Minutes from the FOMC meeting are released tomorrow.

Euro – European Markets

The euro has climbed back to 1.36 against the US dollar and gained against the Japanese yen this morning as improved confidence aids the distribution of funds outside the safe havens. The euro is trading lower against the pound, Australian, New Zealand and Canadian dollars as well as the South African rand.

Yesterday the eurozone posted an unexpected trade surplus in March with seasonally adjusted figures showing exports strengthened by 1.6% in February. Imports increased by 0.4%. While this data shows a significant contraction for trade on the year, it also shows trade is beginning to recover after the eurozone slipped into recession in mid-2008. The euro has also rebounded ahead of the German ZEW economic survey out this morning which is expected to show an improvement in business confidence in Germany.

Other Currencies – Highlights

The New Zealand dollar remains weak this morning as official statistics show the service sector PMI fell from 47.1 to 43.7. Asian equities advanced overnight as a strong Wall Street session yesterday translated into gains for many of the Asian currencies. The euro, pound and US dollar have all gained ground against the yen and the Nikkei index climbed by over 2% yesterday. The Indian rupee has gained another 50 paise against the US dollar to trade at 47.6 this morning as the election of Manmohan Singh’s Congress Party has increased optimism over future economic reforms.

Glenn Stevens, governor of the Reserve Bank of Australia, has claimed the Australian economy will be supported by interest rate cuts and commodity demand from China. The Australian dollar climbed to its highest level in a week against the US dollar, boosting the New Zealand dollar along with it. The Reserve Bank of Australia has predicted the Australian economy is well placed to weather the recession due to its strong commodity orientation and effective economic policy. Consumer confidence and wage price figures are due in Australia tomorrow.

Mr Darling, who will present his Budget on 22 April, has said the recession will be more severe than forecast. In making its calculations, the IFS assumed that the government would ultimately have to cover bank losses of £130bn, which have so far not been included in the government’s calculations.

Pound Sterling – UK Markets

UK car sales fell by 30.5% in March, compared with the same month last year, the latest industry figures have shown. The number of new UK registrations in March was 313,912, down from 451,642 the year before, said the Society of Motor Manufacturers and Traders. SMMT chief executive Paul Everitt says the government needs to do more to boost confidence.

The pound has hit a two-month high against the US dollar in morning trading as investors reacted to further gains made by UK equities. A rise of over half a cent has taken the pound to interbank levels not seen since February – between 1.4601 and 1.4987.

US Dollar – US Markets

According to figures from the Department of Labor, the number of people employed in the US fell by 663,000 in March. The jobless rate rose to 8.5% from February’s figure of 8.1%, meaning it is still at its highest since 1983. It means that since the recession began in December 2007, 5.1 million jobs have been lost, 3.3 million of them in the past five months.
Euro – European Markets

Data from European Union statistics agency Eurostat has shown that eurozone industrial producer prices posted their biggest drop in annual terms for almost 10 years in February.

The report will heap pressure on the European Central Bank to lower interest rates further in the months ahead, with factory gate prices dropping 0.5% on the month, leaving them 1.8% weaker than in February last year. The drop is the seventh consecutive monthly decline in prices.

The Bank of Spain has predicted that the country’s rate of unemployment will reach 17.1% in 2009 and 19.4% in 2010. Spain currently has the highest unemployment rate in the European Union, with a rate of 15.5% in February, nearly double the EU average.

Other Currencies – Highlights

The Czech koruna has risen to a 2-week high against the US dollar after a report showed that the Czech trade surplus increased more than expected in February.

A report by the Czech Statistical Office said the trade surplus stood at CZK8.69 billion in February, up from CZK3.46 billion in the previous month. Economists expected the surplus to increase to CZK5 billion. A year ago, in February, the surplus was CZK13.03 billion. In February, exports dropped 22.2% year-on-year to CZK169.4 billion, while imports fell 21.5% to CZK160.7 billion. At the time of writing, interbank levels for the koruna-dollar pair are around 19.495 and 19.535.