The dollar continues to rally pushing the EUR/USD below 1.50. The weakening of the Euro has also had a knock-on-effect against Sterling, the pound hit a 3 month high against the single currency. The greenback posted a new high on the year against the pound. Traders are expecting to see a clearer indication whether or not the dollar has broke free from its down trend by the end of this week, having said that it is clear from the price action that investors are already positioning themselves backing rumours that it is likely that the US dollar will be the first major currency to get through the financial downturn.

Monday 11 August 2008, 11:13am

The Bank of England’s Monetary Policy Committee left rates unchanged at 5% today, the decision was widely expected. The bank is clearly in a tough position, the outlook for growth is weak and inflation is becoming a serious concern. Sterling stayed close to a 7 week low against the Euro.

After a previous hike in rates by the ECB last month, today they have decided to hold tight at current levels. The Euro was sold aggressively against the US Dollar as Trichet suggested second-half economics to slow implying the ECB are unlikely to raise interest rates again this year.

Thursday 07 August 2008, 04:29pm

The US Dollar consolidated on the gains made against the pound and Euro. The FOMC voted to keep lending rate steady at 2% for a second consecutive meeting. The Federal Reserve noted in their comments the upside risks to inflation were a significant concern. Many traders were disappointed as they were expecting a hawkish statement. Recently the dollar has been helped by a weak pound and a Euro that seems to be coming under more pressure.

Wednesday 06 August 2008, 03:51pm

The pound plummeted to a six-week low against the greenback as HSBC Holdings reported steep earnings decline. Against the Euro, Sterling fell to its lowest level in 2 weeks. Sterling was the second worst performer among the 16 most actively traded currencies today after the Sunday Times claimed analysts as saying the Royal Bank of Scotland may report a pre-tax loss of 1 billion pounds this week.

Monday 04 August 2008, 06:16pm

Cable had a fairly range bound day yesterday as the US Dollar consolidated the gains made on the previous day. Negative data flooded the news wires yet again, UK Consumer confidence fell to its lowest level since the first recording in 1974. House prices posting the largest annual drop for more than 16 years did not help the pound. The economy is now edging closer to recession. The average house price has dropped 8.1% from a year earlier.

Cable does not seem to feel comfortable above the $2 level anymore, since the beginning of April each time we have traded above the key psychological level we have seen a rejection. It would not be a surprise if traders plan to retest the 1.94 level in the coming months.

Thursday 31 July 2008, 10:17am

Sterling has a very mixed day against the majors yesterday, rallying sharply against the euro but was sold aggressively against the US Dollar. Long term inflation expectations fell which is good news for the Bank of England to digest, this may give them more room for flexibility on rates.

The US dollar hit a five week high against the Euro making a two cent gain to trade at $1.5552.

This morning the UK telegraph reported Italy is sliding into a deep structural crisis and risks being forced out of Europe’s Monetary Union as the region’s economic downturn gathers pace. Comments like this should keep the pressure on the Euro for some time.

Wednesday 30 July 2008, 11:32am

This morning the pound has been sold after Rightmove released its house prices survey showing prices are down 2% on the year to £235,219. Rightmove confirmed that stocks of unsold homes has hit record levels. Sterling lost just under 1 cent on the US dollar. Doom and gloom comments from MPC arch-dove Blanchflower has not helped the situation. It is now even less likely the Bank of England’s Monetary Policy committee will raise rates in August.

Against the Euro, Sterling was sold to 79.69 pence from 79.29 pence.

Monday 21 July 2008, 11:01am

The US Dollar was aggressively sold against the Euro and the pound yesterday. Against the Euro, the US Dollar was sold from the open having traded to a low of 1.6038 later in the morning. the greenback then began to claw back its loses for the day. It was a similar story against the pound, cable smashed through the $2.000 level trading up to a high of $2.0157 before we saw some profit taking and short term traders invariably tring to play the correction. UK inflation rose to a record high in June, the CPI rose to 0.7% on the month and 3.8% on the year in June.

Wednesday 16 July 2008, 10:28am

As expected the Federal Reserve left interest rate unchanged at 2%. During the press statement officials did not really give the market a strong signal that it would raise interest rates later in the year. There were a few indications of positive signs in the economy however persistent references were made to rising energy prices limiting growth. The FOMC said unemployment had weakened and financial markets remained under considerable stress even as growth risks diminished somewhat.

The US Dollar lost over a cent against the pound and a cent against the euro.

Thursday 26 June 2008, 02:56pm

Yesterday was a quite day in the FX markets as investors look toward the Federal Interest rate meeting later today. Traders are focusing on a less hawkish tone. Policy makers are expected to keep the target lending rate at the lowest level in more than 3 years. It is likely the Federal Reserve will signal today that inflation is becoming a bigger risk factor than recession and the credit crunch.

This morning the US Dollar has been sold against the Euro and the pound.

Wednesday 25 June 2008, 03:55pm