The FairFX Foreign Currency Exchange Blog
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The US Dollar maintains its stride against the Euro and Sterling as Ben Bernanke declared once again that an increase in inflation expectations is a significant concern. Traders are betting that the Federal Reserve will raise interest rates this year.
Thursday 05 June 2008, 10:38am
A report yesterday from UBS warned UK house builders would face extreme pressure due to the rapidly deteriorating conditions of the UK housing market.
Economic data weighed heavily on Sterling, the pound made losses against the Euro and the US Dollar. Today is MPC is widely expected to leave rates unchanged at 5%.
Thursday 05 June 2008, 10:37am
- US Dollar rises against majors
- ECB interest rate decision due on Thursday
- Bank of England's MPC interest rate decision due on Thursday
The US Dollar is higher today against the Euro and the pound. The markets attention is no longer focused on interest rate cuts but talks of an interest rate hike. The outlook is sustaining the dollars strong sentiment.
After a fairly quite week for cable, this morning sterling has been sold aggressively against the dollar. The pound is trading back at 1.9624 against the US Dollar. Against the Euro, sterling is also losing ground back around the 1.2633 level. Analysts expect the Monetary Policy Committee to leave rates unchanged on Thursday.
Last week was tough for the Euro as it lost close to 2 percent against the US dollar. The ECB has consistently defended a hawkish stance, not cutting rates but talking of a hike. Many analysts are predicting a rate cut believing that intense pressure is building on the ECB, slowing growth and a strong Euro is becoming the primary concern.
Monday 02 June 2008, 11:56am
- Sterling continues to rally against the Euro
- Euro sold against majors on weak economic data
- Better than expected GDP data supports the dollar
The US Dollar had a fairly good day against most majors as oil was sold and traders began to focus on US inflation. Over the last 3 day the US dollar has rallied from a low of 1.5818 to a high of 1.5481 against the Euro, a strong swift move which technically looks set to continue.
The pound was sold against the US Dollar on the back of a historically sharp monthly fall in UK house prices. However, the news was not enough to see any major follow through. Having been sold to a low of 1.9670 in early morning trade, cable bounced back up trading above the 1.9800 level close to the highs of the day.
It was a tough day for the Euro; the single currency was sold against the pound and the US dollar. Poor economic data weighed heavily on the single currency. German unemployment was on the rise, disappointing expectations of a drop. Euro-zone consumer confidence also weakened.
Friday 30 May 2008, 11:15am
- US Consumer Confidence hits a 16 year low
- Mortgage lending in the UK fell by 40% last month year on year.
- ECB’s Weber: There is no room to cut rates this year
The US Dollar had a good day yesterday against the euro and the pound as the markets saw an ease in crude oil prices. Economic data releases in the US were poor, consumer confidence fell along with a continued drop in house prices.
According to the British Bankers Association, mortgage lending fell by nearly 40% last month year on year as buyers continued to struggle to secure home loans. The pound came under pressure early morning yesterday against the Euro and US dollar, however later in the day made back some ground against both currencies.
The Euro is still holding firm against sterling as economic data form both sides seem to be cancelling out any move for either currency. Given the current environment, fundamentally both economies are still looking reasonably good.
Wednesday 28 May 2008, 11:45am
- Sterling rallies on better than expected retail sales
- US Dollar continues to lose ground against Sterling
- Dollar set for weekly loss against Euro as Oil cost rise
The US dollar began to fight back against the Euro after two days of loses as traders look to buy into an oversold dollar. Poor jobs data from the US and good European economic data was the fundamental reason for the selling. It is possible that the dollar bounce may not be sustained as next week is likely to be a tough week for key US economic figures.
Sterling had a good day against a basket of currencies as retail sales came in better than expected and market participants' are beginning to appreciate that the BoE may no longer be focusing on rate cuts at this stage as inflation is becoming the primary concern. Against the US Dollar, Sterling continued to rally in early morning trade, cable retested the mid-point of the previous day and rallied aggressively trading up to a high of 1.9849. This morning the pound is flirting with the 1.9800 level. Against the Euro, Sterling found good support on Wednesday at key retracement levels, yesterday the uptrend exploded into a rally of over 100 pips in GBP /EUR.
As expected we saw some profit taking in the Euro yesterday against the US Dollar. The pound also upheld pressure on the single currency. If we get a surge of conflicting economic data in Europe verses the US it is possible we may see a breach of the key 1.6000 level.
Friday 23 May 2008, 12:04pm
- German IFO business sentiment rebounds
- Bank of England reveal 8-1 vote to keep rates on hold
- Oil smashes through $135 a barrel
The US Dollar lost ground yesterday against the Euro, taking out a four week low. Against Sterling, after a quite morning the greenback gave way and was sold in the afternoon. The Federal Reserve failed to provide any support for the dollar by maintaining their gloomy outlook for the US economy. The Fed minutes revealed expectations of higher unemployment later in the year.
The Bank of England’s Monetary Policy Committee revealed it voted eight to one to keep rates on hold at 5% as they focus on inflation. This morning the pound has risen again against the US Dollar, as Retail Sales declined less than forecast in April. After trading at a low of 1.9680 this morning, cable made new highs for the day taking out 1.9759.
This morning trader tested levels above 1.5800 against the US Dollar, however there was no further buying interest. It is likely we may see some profit taking today. Against the pound yesterday the Euro rallied on the back of the German IFO data as business sentiment rebounded in May.
Thursday 22 May 2008, 11:59am
- German ZEW indicator falls.
- Bank of England MPC to release minutes today.
- Federal Reserve to release minutes today.
The dollar was sold across the board against a basket of currencies. The greenback hit a 3 week low against the Euro. The producer price index which is a measure of the average price level for a fixed basket of capital and consumer goods received by producers rose to 0.2%.
The pound was boosted by the dollar’s decline, yesterday cable opened just below the 1.95 level and rallied over 2 cents. Against the Euro, it was another unexciting day for sterling where hardly any ground was made. Todays focus will be on the Monetary Policy Committee’s minutes from the May meeting where interest rates were left on hold at 5.00%.
The German ZEW economic sentiment figures fell slightly as economist predicted a rebound. After trading at a 3 week high against the US dollar, it is likely that we may see some follow through in the coming days. The Euros momentum against the US Dollar is also likely to also have a knock on effect against Sterling.
Wednesday 21 May 2008, 12:22pm
- US Dollar finds support on the back of Economic Leading Indicators.
- Euro-Zone awaits key German ZEW Economic data.
- Australian Dollar gains as RBoA discuss possible future rate hikes.
US Leading Indicators rose for the second month suggesting any slowdown in the US economy could be limited. Activity rose 0.1% in April disregarding expectations. The March figure saw the same increase. The US Dollar saw a good move yesterday against the Euro and Sterling.
The pound has a fairly quite day against the Euro yesterday, however lost ground against the US Dollar. Cable was sold form a high of 1.9623 to a low of 1.9451. Today traders will focus on the Bank of England’s minutes due at 9.30am.
The Euro is pushing higher against the US Dollar this morning; it is likely that an improvement in the ZEW indicator of economic sentiment will cause some temporary buying of the Euro. Against Sterling the Euro has been fairly range bound since the beginning of last week.
Tuesday 20 May 2008, 11:19am
- US Economic data generally weak.
- UK Prime Minister hopeful of a rate cut.
- Japanese GDP stronger than expected.
US economic data was generally weak, Industrial Production fell 0.7% to be down 1.2% since January. Manufacturing indexes for Philly Fed and Empire State were both negative. The Fed Chairman Bernanke indicated that banks lending growth is still substantially constrained and more capital is still required, effectively implying it is likely that rates will be kept lower for a lot longer.
The UK Prime minister, Gordon Brown appeared to put pressure on the BoE to cut rates, he did however emphasis that rate policy was a central bank issue. Against the dollar the pound had a fairly range bound day yesterday, cable was sold down to 1.94 in the morning where Sterling found some support pushing back up towards the highs of the day just above 1.95.
After a good start to the day for the Euro on the back of excellent GDP numbers in early morning trade, the single currency gave back its gains and more against the pound and the dollar. However the growth figures will justify the ECB’s arguments for keeping rates on hold at 4%.
Friday 16 May 2008, 11:31am
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