In the early hours of this morning in the UK, the pound gained as much as 1.5% against the US dollar within seconds. A trader is blaming his ‘fat fingers’ for the mistyping of a transaction that saw hundreds of market orders automatically fill. The pounds gain was only short lived as it quickly moved from the 1.5% appreciation to only a 0.5% appreciation.
A relatively quiet day in the UK today with only the Halifax house prices scheduled to be released – the annual growth rate is expected to increase.
The final estimate of the Q1 GDP is expected to be unrevised at 0.5% for the quarter confirming that domestic demand was the main driver for the growth so far. Both German and Spanish Industrial production are set to be released (German industrial production has already ben released where a slight increase was seen).
Another quiet day in the US, but an unexpected fall this morning due to ‘fat fingers’ may set up a more interesting day than first anticipated. The Reserve bank of Australia kept interest rates unchanged at 1.75% after they were dropped last month.
Morning Market Rates
In the UK this weekend a poll has changed the views on the UK referendum and it now looks just as likely that we are going to leave the EU as it does that we are going to stay. A near 4% sway in the votes from this time last week has left the pound in a sticky situation and the rates have fallen across the board, reflecting the swing. If we were to leave the EU at the end of the month, the rates could fall well into the low teens rather quickly! The bank of England has said that uncertainty surrounding the referendum vote is dampening UK growth, while global institutions including the IMF and the Organisation for Economic Corporation and Development are warning of a dire fallout if Britain votes to quit the EU. I would advise that people read deeply into the referendum and make their own minds up and not be easily influenced by the scare mongering that is currently going on, as it will have an impact on us as a nation which ever way the final poll goes at the end of the month.
Friday’s weaker than expected non-farm payrolls hit the US dollar hard. The weakest increase month on month since 2010 saw the US fall across the board. We expected to see an extra 160k jobs which was an improvement on last month but not quite as high as the figures seen earlier in the year. The average for Q2 is far lower than that of Q1 and would take a miracle to get back to the levels of Q1. A disappointing release in the Unemployment rate also impacted the dollar which hasn’t recovered.
A relatively quiet day in the Eurozone today but the damage has been done this morning already seeing GBPEUR hitting a 3 week low. German factory orders declined the most since October last year in the early mornings release seeing the euro fall slightly. What looked to be a good start to the day for the pound, quickly changed as French Retail PMI improved.
Morning Market Rates
The Pound took a little bit of a nose dive overnight following form the highs earlier during the day. The Pound remains in a strong position siting above 1.30 on the Euro and 1.45 on the US Dollar. It is a quiet day for the Pound ahead of the bank holiday weekend.
A busy day for the US with the Growth figures and university of Michigan sentiment index due. This is followed later in the evening with Janet Yellen speaking at Harvard. Markets are expecting that GDP growth has picked up from the first estimate to 1.0% in the second estimate reflecting firmer consumer spending and construction data.
Again no data due for the Eurozone.
With the Bank holiday weekend approaching why not look to place a Limit Order at a pre-desired rate to take advantage of the overnight and bank holiday market movements! You never know a rate that is not expected could possibly be achieved……and how..by placing a limit Order! Please call or mail me for quotes and to discuss further.
MORNING Buying Currency exchange rates:
The pound has surged over the last few days due to a mixture of positive UK data and negative data from the euro-zone. Yesterday’s Public Sector Net borrowing (pounds) was increased from 5.8B last month to 6.6B this month. Monday nights release is the main reason behind the pound increasing. From what has been said, it looks as if the turnout of votes to the referendum could be quite low, and those that are likely to vote are going to be the older generations who are more likely to vote in, than they are out. The markets now have confidence that the pound is more likely to stay and there is slightly less uncertainty which is the reason behind the gains.
The referendum continues to draw closer and with the release seen on Monday, it looks as if the rates may continue to climb higher. We have seen a small glimpse of what may come if the UK stays within the EU. A 2% gain across the board in the space of 2 days is rather impressive on the back of talks that we may stay within.
The pound has rallied this afternoon following on from a mixture of negative data from the euro-zone and positive key releases in the UK. Bad news tends to fall off of the euro rather quickly, quite like Teflon, so the gains seen over the last few hours may be short lived.
Talks about the UK referendum continue to remain in the air and don’t get anymore interesting the more you hear about it. If we leave the EU rates could plummet due to the uncertainty that would be caused…. and if there is one thing markets hate, it’s uncertainty.
On a positive note, if we were to stay within the EU, we would like to think that the rates would rise dramatically as the uncertainty would be removed from the air.
Afternoon market rates
US New home sales are once again expected to rise. This time they are expected to rise from 511k to 521k. The pound has fallen back from the highs as investors and brokers are taking profits from the highs that have been seen, hence the rates pushing up and then falling all the way back off within a few days.
Today’s questions from the Treasury Select Committee for Bank of England Governor Mark Carney and his MPC colleagues Broadbent, Weale and Vlieghe regarding the most recent inflation report will be scrutinized for any risks that may come with the UK referendum. UK data to be released today is the Public Finances, although these will only gain limited interest as it is so early into the financial year.
German Gross Domestic Product has already been released this morning and there was no change from the previous release . German imports did improve but fell slightly short of the expected release seeing pounds to euros rate increase marginally.
With the only data to come out in the Eurozone today being the German Wholesale Price Index, there is very little indicating the strength of the Euro is going to increase, although the rate may increase if the UK data comes in as expected.
Tomorrow in Europe we have the Eurozone Industrial Production where there is a near 1.4% drop from previous figures. The gains the Euro could see today may be completely neutered tomorrow.
The news with the most significance in the UK today is the CPI (Consumer Price Index – December) which is expected to come in weaker than the previous month, around 0.7%
With the CPI moving further away from the target of 2.0% the Pound is likely to weaken off against the Euro and the US Dollar and possibly some of the other 19 major currencies. Already at a 12 year low of 1.0% can it really drop even further?
With very little to come out today in the US with much interest to economists, the Dollar looks as if it is going to be up against the Pound following on from the UK CPI figures set to come out this morning.
MORNING MARKET RATES:
Last Friday saw the Pound gain against the Euro due to positive Manufacturing figures. The increase in rate was also helped by Germany posting a weaker than expected Trade Balance. Both of these factors kept the pounds to euros exchange rate well in to the 1.2800 for most of the day.
With the only data for the Euro today being the ECB (European Central Bank) talking about Monetary Policy, there is very little that is likely to strengthen the Euro against the Pound and US Dollar.
Due to a very quiet day in the UK, the Lloyd s Employment Confidence this morning could be of more significance than usual following on from last months figures indicating that inflation expectations have weakened off to the lowest level since this time 3 years ago.
Tomorrow’s Consumer Price Index is likely to influence a large movement for the Pound, expected to come in weaker than the previous year. 2% is the target rate for a good economy but is set to come in around 0.7%. Could this see the Pound fall or present a opportunity to Buy Euros at better rates?
This afternoon’s US Economy Outlook, is not of high interest to the economists today and therefore the positive data for the US today is unlikely to see the Dollar strengthen, although this morning has already seen a near 50 point drop which is now sitting at around 1.5100
This morning’s German trade balance figures came in negative seeing the Euro exchange rate weaken off against the pound by around 20 points currently sitting around 1.2815
Other than that, a relatively quiet day for the Euro rate, with very little data of much significance to come in favoring the Euro.
Yesterday’s German Factory orders came in much weaker than expected, hinting towards the manufacturing activity remaining under pressure.
In the UK this morning we have the Industrial and Manufacturing Production for November expected to come in stronger that last year. Both a good short term indicator for the strength of the economy.
As there is no more Euro data today to back up the weak Euro, slight positive UK data could see an upward movement in the pounds to euros rate.
In the US this afternoon we have Non-farm payrolls for December. This is expected to come in less than previous months! The Dollar is in a good position to gain once again against the Pound and Euro.
Following on from this, we have the US Unemployment Rate once again expected to decrease showing that although strong, the US economy continues to get stronger. How much longer can this go on for?
Euros to US Dollars hovers around 1.1810 Is this the turning point for the euro dollar and the beginning of foreign exchange traders Buying Euros?
Having seen a near 100 point movement over the last few days, the Pounds to Euros exchange rate seems to be hovering around 1.2750
A relatively busy day for the Euro rate today, possibly seeing the Euro strengthen for a brief period until the main UK data comes out this afternoon.
Over the past few days we have seen the German economy continue to strengthen. A great start to the new year if Germany begins as they mean to go on, at this rate it looks unlikely that we will see 1.2900 again for a long time as Germany seems to be holding the Euro-zone together.
This morning in the UK we had the Halifax house price index, indicating that house prices are still rising in the UK Month on Month but the rate of increase has slowed quarterly.
Interest rates expected to stay at the same level for the UK, the economy isn’t getting worse for the UK, a good sign for Euro buyers.
The main data to come out for the UK is this afternoon where we will hopefully see the pound strengthen against the Euro once again, currently sitting 1.2750 but seeing highs yesterday close to 1.2800
This could be a chance for the Pound to gain against the ever-strengthening US Dollar, which sits at 1.5050 although has been close a few times to dropping under 1.5000
Pounds to US Dollars is at a low and looks as if it’s going to get worse before it gets better, although for those Dollar sellers a perfect time to take advantage of the one and a half year high.
This afternoon for the US Dollar could again see it strengthen against most of the 19 major currencies as the amount of Initial Jobless Claims continues to decrease, showing that an already strong US economy is expected to get stronger.
EURUSD drops under 1.1800 for the first time since August 2005 and continues to decrease.