Sterling gains ground across the board | Smart Daily Currency Note

Sterling

Sterling performed strongly yesterday, gaining sharply on both the euro and the US dollar. This was thanks largely to strong services Purchasing Manager Indices (PMI) data, showing the sector had expanded in July greater than expected. These results added to signs that the economic recovery is gathering pace, and was duly reflected in the strength of the currency. This being said, the market will remain little tentative before hearing the inflation statement from Governor of the Bank of England this coming Wednesday, where he will outline plans for forward guidance on interest rates. Before this, today see's the release of UK monthly manufacturing production data, and as such could see further movement for the currency. Call your trader today for the latest prices on sterling during an important week for it.

Euro

Yesterday was a relatively quiet day for the euro as it responded to mixed data. The seventeen-nation currency lost ground sharply against sterling in response to sterling strength and weakened slightly against the US dollar. Eurozone investor confidence data came through significantly worse than expected during the morning spurring a moderate decline, however the day's other key data sets were largely positive and caused the euro to steady throughout the rest of the day. Spanish and Italian Services PMI data, which while both indicating a contraction, were revealed to be marginally better than expected. Similarly, monthly retail sales figures were down, but not by quite as much as predicted. This morning, euro performance may be affected by Italian second quarter preliminary growth figures as well as German monthly factory orders data. With more positive economic news emanating from the US and UK, traders will need to see some signs of economic recovery in Southern Europe in order for the euro to keep pace with its major trading partners. Call your trader now to keep track of euro performance.

US dollar

Yesterday was a mixed day for the US dollar, falling against sterling and the Japanese yen. Losses for the currency, however, were curtailed thanks to non-manufacturing PMI data released, showing that the service industries in the US had expanded ahead of expectations. At the same time, gains were seen for the currency against the Euro. Speculation on when the Federal Reserve will begin their tapering program still occupies investors, and will continue to affect the performance of the currency – especially in light of comments from one of the members of the Federal Reserve who yesterday suggested that the central bank should start to taper in September. Today's most important release for the currency will be the trade balance, due out at 1.30pm, and this will likely have a noticeable impact on the strength of the currency, while later on this afternoon another member of the Federal Open Market Committee is speaking. Get in touch with your trader today to get the latest price on the US dollar.

Worldwide

Elsewhere, eyes were on the Antipodean nations, where both the New Zealand and Australian dollars struggled yesterday. In New Zealand the slide was a response to Fonterra Group, the New Zealand-based, world's-largest milk exporter, confessing that a recent batch of exports were infected with a deadly bacteria. This in turn lead to China and Russia imposing import halts on all dairy products coming out of New Zealand. With the dairy industry accounting for some 25% of New Zealand's total exports, the news had a marked impact on the trade-reliant nation's currency. The Australian dollar also struggled, sliding to near three-year lows against the US dollar. The slide was attributed to retail sales coming in worse-than-forecast, boosting odds for interest rate cuts being implemented by the Reserve Bank. Overnight we saw the Reserve Bank of Australia cut interest rates by 0.25% and we saw a slight rebound in the value of the Australian and New Zealand dollars but these gains could be short lived as their problems seem to be growing. The Japanese yen performed well yesterday, as investors bought in to the safe-haven currency following uncertainty in the markets – pushing the yen up to four-day highs against the US dollar. Today, we have influential trade balance data out of Canada, and late this evening we have quarterly unemployment data out of New Zealand. Get in touch for the latest rates.

Sterling strengthens late Friday, will it continue? | Smart Daily Currency Note

Sterling

Sterling had a strong end to the week on Friday, with construction data from July coming in considerably better than expected, hitting the highest level in over three years. These figures, coming off the back of strong manufacturing data on Thursday, meant that sterling logged some notable gains at tail end of the week. These gains were extended against the US dollar as worst-than-forecast employment figures out of the US pegged back the nation's currency. Considering the strong data out of the UK, sterling did not advance as much as it might have done and traded in a fairly narrow range as traders look ahead to this week's Bank of England inflation report. Wednesday will see the UK central bank Governor “respond to the Chancellor’s request for its assessment of the use of thresholds and forward guidance” during which he could indicate that interest rates will stay at record lows for a prolonged period. Sterling is likely to be under scrutiny and probably pressure for much of this week given the uncertainty surrounding what will be said. We also have services PMI data released today, inflation data on Tuesday and more manufacturing data on Wednesday. It promises to be an interesting week for sterling, so get in touch for the latest rates.

Euro

The euro struggled on Friday and only really made notable gains against a weak US dollar. Data released from Spain showed that the number of people without a job had fallen in July for the fifth month in a row, albeit by less than had initially been anticipated. Despite this drop, the International Monetary Fund suggested that unemployment in Spain would remain “above 25 per cent to 2018”. Services PMI figures released this morning for the Eurozone will be watched closely by investors who will hope for a positive reading following the better than expected manufacturing PMI figures released last week. It is a busy week for Germany with factory orders, industrial production and trade balance data all scheduled to be released. Other notable releases includes the preliminary Italian growth figures and the monthly bulletin from the European Central Bank. Call your trader now for the latest on the euro.

US dollar

Friday rounded off a volatile week for the US dollar, with another day of big movement. Early in the day the US dollar enjoyed slight gains following data released on Thursday showing a fall in jobless claims, before seeing these gains wiped out as it plummeted, losing ground quickly over the day against most of its major trading partners. This trend was set after the non-farm payrolls data came our much lower than expected, detailing growth of 162'000 in July versus forecasts of 185'000 - the lowest number since March. Moreover, last moths figures were also revised lower. As such, expectations that the Federal Reserve would start tapering by starting any time soon were lowered, as they have stated this would only be considered if significant improvements were seen in the labour market, and as such will want to see more sustainable growth in this area before implementing this. Important data due this week for the US dollar includes non-manufacturing PMI, the trade balance, and further unemployment data in the shape of the weekly unemployment claims figures, all of which could see a reaction from the US dollar rates. Call your trader today for the latest price on the Dollar.

Worldwide

Elsewhere, the Canadian dollar's slow week continued into Friday and it will remain in focus this week with a raft of data released including trade balance figures, unemployment statistics and PMI data. The South African rand fell through the psychological level of 10 to the dollar in early trade on Friday amid upbeat expectations for US jobs data. The worse-than-forecast results from the US sparked a response from the rand, and we saw a strong end to the week from the South African currency. The Australian dollar held three-year lows throughout Friday, as markets remained tentative ahead of Tuesday's interest rate decision and the increasing likelihood of a cut. Also out of Australia this week we have trade balance data, unemployment figures on Thursday and there is another statement from the RBA on monetary policy early Friday morning. It is an important week for Japan with current account figures, the monetary policy statement and the Bank of Japan press conference that follows. A big week for data, so get in touch for the latest rates.

Poor week for sterling | Smart Daily Currency Note

Sterling

Sterling performed poorly during the early part of this week, notably reaching a four month low against the euro and experiencing consistent losses against the US dollar. The only real negative data coming from the UK has been data from the British Retail Consortium showing that average retail prices had dropped for the third month in a row. The cause of the slide was market speculation ahead of yesterday's Bank of England rate setting meeting. Investors faith in sterling weakened as the possibility of the central bank taking further measures to loosen monetary policy. However, sterling strengthened against the euro and US dollar yesterday as the statement revealed that the £375 billion asset-purchasing target is to remain constant, as is the 0.5% interest rate. On the topic of forward guidance on interest rates, the central bank said that in next week’s inflation report it would “respond to the Chancellor’s request for its assessment of the use of thresholds and forward guidance” which means next Wednesdays release will be of greater importance than normal. Sterling also benefited from better than expected manufacturing data, which is encouraging given that manufacturing growth has been sluggish since the recession. This morning, data from the construction sector is being released and we may see sterling show further signs of appreciating if the figures seen can replicate those for the manufacturing sector. Call your trader now to see if the sterling slide continues.

Euro

Despite getting off to a quiet start in this week, the euro reached four month high against the sterling. No significant data was released, although consumer confidence across the euro zone was at a 15 month high along with data showing that unemployment rates across the region throughout June had fallen for the first time in two years. Markets were tentative in anticipation of yesterday’s Central Bank's rate decision and statement that followed, the major affecting event of the week. As expected, interest rates were kept on hold, but the comments from the President of the European Central Bank that followed did cause some volatility in the market. Whilst suggesting that the worst was over for the Eurozone, the President did provide forward guidance on interest rates as he stated that rates were “to remain at present or lower levels for an extended period of time” and said that “expectations of rate hikes in money markets are, according to our assessment, unwarranted.” The other significant release yesterday was the manufacturing data which came in above market estimates but did little to effect the relative strength of the euro. Today, Spanish unemployment and Producer Price Index data will be the main points of interest for the Euro. Call your trader now for the latest on the euro.

US dollar

A strong start to the week for the US dollar as better than expected Pending Home Sales data increased speculation that the Federal Reserve would taper bond-buying this Autumn. Whilst the figures did reveal a decline, the decline was not as big as expected after reaching the highest level in over six years in June. On Wednesday, despite better-than-forecast GDP data, the US dollar experienced high levels of volatility across the board and movements in both directions as traders held their collective breath ahead of the evening's statement from the Federal Open Market Committee. Traders had been speculating the statement might reveal further clarity regarding the so called tapering of the Federal Bank’s bond buying program. However, no such details were given and the committee stated that it was “prepared to increase or decrease” its bond buying program where necessary, whilst stating that deflation could hard harm the US economy. Gains were seen yesterday in response to more convincing economic data. Both unemployment and manufacturing data from the US were better than expected which fuelled speculation once again that the central bank could taper its monthly asset purchases at some point this year.  Looking ahead to today, we have the highly influential non-farm payrolls data released. Given the rhetoric from the Federal Bank that tapering would only be considered when the labour market has shown significant improvements, this release is likely to cause volatility in the market. Additionally, a member of the Federal Open Market Committee is speaking in the afternoon and will comment on future policy deliberations. Call your trader now to see how the latest data is received.

Worldwide

Elsewhere, it has been a difficult week for the Australian dollar following comments from the Governor of the Reserve Bank of Australia which eluded towards a rate cut at the next policy-makers' meeting. Following the comments, the Australian currency fell against all of its 16 most-traded peers, and to the weakest level in three years against is US counterpart. Tapered growth forecasts out of China combined with a general softness in the global commodities market has piled further pressure on the export-based economy. After a strong start to the week, logging substantial gains off the back of high oil prices, the Canadian dollar dropped off on Wednesday and Thursday following worse-than-forecast growth figures, and amid speculation the Federal Reserve will taper monetary stimulus. As Canada's biggest trade partner, a tightening of monetary policy in the US would have a marked impact on the Canadian economy. On Tuesday we saw the Indian rupee lose ground against all of its 31 most-traded peers, and hit 10-year lows against sterling. The big shift was in response to the central bank keeping interest rates unchanged and saying that steps taken to tighten cash supply this month will be rolled back. Overnight we saw the release of quarterly inflation data from Australia, but little else is expected to be released today. Get in touch for the latest rates. 

Sterling slides, will Mark Carney make it worse? | Smart Daily Currency Note

Sterling

The sterling slide continued yesterday as data from the British Retail Consortium showed that average retail prices have dropped for the third month in a row. The poor data in combination with a continuation of the decline in support for sterling ahead of today’s MPC statement has caused sterling to drop to a four and a half month low against the euro and a two week low against the US dollar. Whilst we are unlikely to see any change in the rate of quantitative easing or an alteration in interest rates this month, speculation is rife that the new Governor will use the meeting to provide further forward guidance with regards to how long interest rates will be kept at its historic low. Sterling has been sold off in anticipation of this move, as a result, if no such guidance is given, you would expect the trend to snap and sterling to appreciate. Call your trader now to see how the statement is received.

Euro

It was yet another good day for the euro yesterday, logging slight gains against the majority of its most traded peers and its consistent strong performances shown by the euro over the past 10 days meant the euro hit 4-month highs against sterling. Yesterday's euro strength was attributed to data showing unemployment rates across the region throughout June had fallen for the first time in two years. The single currency has taken support over recent sessions, after a string of positive data suggests that the bloc may be transitioning out of the recession it entered back in 2011. Today will no doubt be a very interesting one for the euro. The interest rate decision at 12.45pm will be closely followed by the European Central Bank’s (ECB) press conference where traders will look for clues towards future interest rate decisions, especially in light of the comments made by the President of the ECB last month where he stated that “interest rates will remain at present or lower levels….for as long as necessary." Get in touch for news and live rates.

US dollar

The US dollar reacted to positive data during the day yesterday as the second quarter advance GDP figures came our much better than expected showing growth of 1.7% for the world largest economy – much greater than the 1.1% initially forecast. More positivity came as employment data came in better than expected, leading to analyst predicting that Fridays’ highly influential Non-Farm payrolls data could also be positive. The US dollar experienced high levels of volatility across the board and movements in both directions as traders held their collective breath ahead of the evening's statement from the Federal Open Market Committee. Traders had been speculating the statement might reveal further clarity regarding the so called tapering of the Federal Bank’s bond buying program, however, no such details were given and the committee stated that it was “prepared to increase or decrease” its bond buying program where necessary, whilst stating that deflation could hard harm the US economy. As traders continue to evaluate the more long-term implications of last night's release, the dollar may be affected by further economic data that is coming out today. Weekly data detailing the number of first time unemployment claims made is being released this afternoon as well as Manufacturing Purchasing Managers Index data. Both of these are key economic indicators so call your trader now to see how markets respond as they continue to deliberate on the future course of US economic policy.

Worldwide

Elsewhere, following Tuesday's decline, the Australian dollar weakened further against it's major partners, hitting fresh 3-year lows, due to continued speculation that the Reserve Bank of Australia would cut interest rates next week. Elsewhere, the Canadian dollar first fell following lower than expected monthly growth figures, before rallying to reverse this trend and ultimately gain on all of it's major partners, thanks to encouraging signs of a US recovery. No more data is due from Canada this week, although signs of recovery in the US would in turn benefit the country's currency. Another big mover worldwide was the South African rand, which fell against its 16 most-traded partner currencies, despite the country's trade gap deficit narrowing in May to 7.7 billion rand ($775 million) from 11 billion rand. The rand weakened along with a number of emerging market currencies as the markets become nervous that the Federal Bank could start to taper off its quantitative easing program. Overnight we saw the release of Manufacturing PMI from China and later this evening sees the release of the Producer Price Index from the Australia, which could have an impact on the currency.  Call your trader now for the latest prices in world currencies.