We saw a flurry of poor data yesterday morning from the U.K including poor retail sales, poor borrowing figures and the possibility of further QE (Quantitative Easing) from the Bank of England.
3 members of the MPC voted in favour of further QE which assisted in the drop for the Pound yesterday morning.
QE is generally seen as negative for the currency concerned as it is essentially pumping more money info the economy and even the mere mention of it over the past few years has led to Sterling weakness.
We have key GDP (Gross Domestic Product figures due out at 09:30am this morning so all eyes will now be on this next release.
Sterling has crept up a little in the past 24 hours following a slightly more positive outlook on the U.K economy by Sir Mervyn King – Governor of the Bank of England.
King upgraded growth forecasts and however did also say there was still a downside risk, and investors still seem to agree with this as confidence in the U.K and indeed the Pound still does not seem too high.
There isn’t a huge amount of data left to come out this week for the U.K so I don’t expect any huge movements in the coming few days however do be aware that in this current global economic situation and surprises can pop up at any time.
The Pound has kicked off the trading week with a little strength against all the major currencies, with the main focus for the U.K this week being unemployment data due out on Wednesday morning.
Unemployment levels have indeed one of the factors that is holding back the Pound at present from moving on to the next level and any improvement would be seen as a huge plus, however levels are expected to come out unchanged.
Following the unemployment figures we have the quarterly inflation report from the Bank of England and Mervyn King speaking shortly after this. Regular market followers will be aware that Mervyn King does tend to be on the negative side however he is due to be leaving soon so he may wish to leave on a high which could give the Pound a boost.
Bailout Loans Extended – EUR Exchange Rates
It has been confirmed that both Portugal and Ireland have been given an additional 7 years to re-pay their bailout loans. Considering the two countries only received their loans in 2010 and 2011 respectively it highlights just how difficult these struggling economies are finding paying back their loans as they need an extension after only a couple of years of first having the deal agreed. To me this also raises the question whether the bailout deals will be extended again and if the Cyprus deal which looks like it is going to be approved shortly will be extended after a few years of repayments. When these bailout deals are created we are told just how strict the terms are and how much needs to be saved or raised through austerity measures and yet the terms are then amended a couple of years later making a bailout considerably better for that country. While this may be good for the country in question and in the long term may help the Eurozone and therefore the EUR it does set a precedence for other countries who may now believe asking for a bailout is that little bit more appealing. How long can this bottomless pit of EU money last? Can the ECB continue to keep bailing out their member states?
These questions are likely to remain unanswered for some time and so I believe we are likely to see a lot of volatility for GBP EUR exchange rates while these issues continue to persist. So, if you need to buy EUR and you would like to be kept informed of all the latest news make sure you speak to one of the knowledgeable currency brokers at Foreign Currency Direct plc who will be happy to act as your eyes and ears on the market.
AUD and NZD suffer as Chinese Economy Slows
It was announced that the world’s second largest economy, China did not meet the predicted growth figures set. Over the first quarter of this year China’s growth was 7.7% compared to a predicted figure of 8% and because of this slightly lower figure the Australian Dollar (AUD) and New Zealand Dollar (NZD) have weakened. Both these countries, especially Australia are directly impacted by the success or otherwise of the Chinese economy as China is the largest importer of Australian raw materials such as iron ore. This means when China’s economy slows down the prospects for Australia and New Zealand are reduced and their currency can weaken. Despite this the fact that the Chinese economy is growing at 7.7% shows just how well they are performing even if they are not quite hitting their forecasted figures and as a result both the AUD and NZD have continually got very strong especially against the Pound hitting some of the lowest levels we have ever seen. While the Chinese economy continues to grow and expand it is likely we could see both Australia and New Zealand’s currencies strengthen further. This could mean that if you need to buy AUD or buy NZD then it may be worth speaking with one of our experienced currency brokers today to discuss the options available to you.
If you need to transfer money abroad and you are looking for the best exchange rates speak with our friendly currency brokers who will be happy to discuss your currency requirements and the options available to you. You can call straight through to our dealing floor on 01494 849752 or alternatively email me on email@example.com
EUR Exchange Rates – ECB Report
This morning we are expecting to hear from the European Central Bank (ECB) who will be giving their monthly report at 9:00 am which could give an insight into how they see the single currency economy performing and then at 10:00 am this morning we will see European employment figures. Both of these data releases could give an insight into the short term future of EUR exchange rates, should the ECB give a positive report and the employment figures come out positively we could see further Euro strength which could reverse the recent trend of Sterling strength.
US Retail Sales Better Than Expected – USD Exchange Rates
Figures from the States yesterday showed that US retail sales came out better than expected as the sales rose by 1.1% the biggest rise in 5 months. This was particularly surprising as at the start of the year an increase on payroll tax began and this was expected to curtail spending and have a negative short term impact on the economy but these figures show that this does not appear to be the case. As a result the already strong USD got even stronger towards the close of trading yesterday especially against the Pound as it moved further away from the 1.50 mark. It appears that there is more positive news coming out of America which could mean we see the Dollar get even stronger which may not be very good news for those clients looking to buy Dollars but will mean there are some good opportunities for clients looking to sell Dollars. For more information or to get a live exchange rate speak to one of our experienced currency brokers today.
Australia Employment Figures Rise – AUD Exchange Rates
Over night figures from Australia have shown that the economy witnessed the largest number of new jobs created since the year 2000 as 71,500 new jobs were created. This is clearly very good news for the Aussie economy and the Australian Dollar (AUD) as more people in employment the more money will be earned through an increase in wages which should then see an increase in spending. Australia has been very dependent on China and how the Chinese economy has performed but these figures show that things could be improving regardless of how well China is performing. This could mean more AUD strength and as a result we could see AUD exchange rates fall further towards the 1.40 level and I believe new record lows against the Pound could well be set soon.
New Zealand Interest Rates – NZD Exchange Rates
As expected interest rates in New Zealand were kept on hold yesterday at 2.5% and the following comments from the Reserve Bank of New Zealand saw them hint that interest rates may stay on hold for some time to come. This stability could mean we see the New Zealand Dollar (NZD) remain strong against the Pound so for the latest GBP NZD exchange rates call or email us today.
If you are looking to send money abroad make sure you speak to us today so we can discuss your currency requirements and all the options available to you. You can speak to one of our expert currency brokers on 01494 849752 or alternatively email me on firstname.lastname@example.org
France Economy Continues To Struggle But GBP EUR Remains Low
Yesterday French President Francois Hollande stated the country will miss their budget deficit target this year. During the elections last year Hollande pledged that he would bring the deficit down to below 3% but it looks like it will be over 3.7% this year, just highlighting how tough the economic conditions in France currently are. With France one of the largest economies in Europe and a country which has supported so many other countries during the difficult times any negative news for France could really see confidence start to be sapped from the Eurozone which in return could weaken the EUR and send GBP EUR exchange rates back up again. However, despite this news from France the markets do not appear to have reacted but I think that if we hear more negative news from France then we could start to see the negativity set in. If you need to buy Euros then make sure you speak to one of our dedicated account managers who will be able to keep you informed of all the latest currency news so you can make an informed decision as to when to trade and transfer your funds abroad.
US Economic Data – USD Exchange Rates
This afternoon we have a number of important economic data releases which could impact Sterling Dollar exchange rates. First up mortgage application figures are released which will give an insight into how the US housing market is performing. Next we will see import and export data which will be closely followed by retail sales figures and finally a budget statement at the end of the day. While the statement may give an indication as to how the Federal Reserve Bank of America (FED) see the US economy performing I believe that the retail sales figures which are released at 12:30pm today could be the biggest market mover. Retail sales is so important because the retail market makes up such a big part of the economy and so should these figures come out as predicted (which is better than last month) then we could see further USD strength today. With the USD getting stronger, especially against Sterling more positive news could really start to push the rates further down which could be bad news for those clients looking to buy Dollars.
New Zealand Interest Rate Decision
At 8pm this evening the Reserve Bank of New Zealand will announce their latest interest rate decision, the expectation is that rates will be kept on hold at 2.5% again but any change from this could mean we see some NZD volatility. So, if you need to send money to New Zealand then speak to us today so we can discuss your options which can include a limit order where you can tell us the exchange rate you would like to achieve and if it is not available our systems will monitor the markets for you and if the rates spike up to your desired level they will automatically buy the currency for you. This means that even over night we can be monitoring the markets for you.
To speak with one of our experienced currency brokers you call straight through to the trading floor on 01494 849752 or alternatively you can email me directly on email@example.com
Below is a list of economic data releases that you need to be aware of if you have a pending currency transfer to carry out.
If you would like to know exactly what could happen upon the releases or would like to get the very best exchange rates on your currency transfer then feel free to contact us on the numbers on this page or to email me directly firstname.lastname@example.org
20:00 NZ NZD RBNZ Interest Rate Decision 20:00 NZ NZD Monetary Policy Statement 20:00 NZ NZD RBNZ Press Conference DEC 06 00:30 AU AUD Employment Change s.a. (Nov) 00:30 AU AUD Unemployment Rate s.a. (Nov) 10:00 EMU EUR Gross Domestic Product s.a. (QoQ) (Q3) 10:00 EMU EUR Gross Domestic Product s.a. (YoY) (Q3) 12:00 UK GBP BoE Interest Rate Decision (Dec 6) 12:00 UK GBP BoE Asset Purchase Facility 12:45 EMU EUR ECB Interest Rate Decision 13:30 EMU EUR ECB Monetary policy statement and press conference DEC 07 10:00 EMU EUR ECB President Draghi’s Speech 13:30 CA CAD Net Change in Employment (Nov) 13:30 CA CAD Unemployment Rate (Nov) 13:30 US USD Nonfarm Payrolls (Nov) 13:30 US USD Unemployment Rate (Nov)
The Pound has made minor gains against the majority of majors this morning, following GDP figures coming out slightly better than expected at 1% growth compared to the forecast of 0.9%.
Again although the Olympics may be partly down to this it does suggest the U.K is still creeping in the right direction and that initial GDP figures released last moth were virtually spot on.
The Greek agreement did not dent rates for GBP-EUR too much which is good news for those looking to buy Euros and maybe suggests that rates may start to creep back up again towards the 1.25 level.. Of course who knows what is around the corner though in this current climate.
The minutes from the Bank of England monetary policy meeting this morning have not led to any huge surprises and once again we have had what can only be described as a fairly stable morning of trading for the Pound so far.
Next on the cards is GDP figures for Germany on Friday which has the ability to kick the Euro rate back into action one way or another but again the way the market has been of late I don’t expect anything major to happen… Expectations are for growth of 0.2% so should this be slightly out and lead to a negative figure then there is the slight chance we would see weakness for the Euro.
The Pound has continued to stay fairly steady in early morning trading today with no major movements of note so far.
We have the on-going Greeks issue which until firmly resolved appears to be leaving Sterling – Euro rates reasonably range bound along with the Sterling – Dollar rate being in a similar situation with the Fiscal Cliff.
The Reserve Bank of Australia meeting minutes from the latest interest rate decision failed to throw up anything of interest for investors either negative or positive for the AUD and I think the big talking point this week may be the Bank of England minutes.
This is tomorrow morning at 09:30am and unless we see anything of great note then we may all be in for a bit of a non event of a week exchange rate wise.
As always though there are always surprises around the corner so be very much aware that the tide could turn at any moment, especially in this current climate!