Daily Forex Commentary

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Friday, 03 February 2012 - Market Commentary

By Alex Hartley


:: United States Dollar: Sterling remains high against the Greenback despite Posen's comments. UK Construction PMI started the data releases yesterday for both sides of the pond and came in disappointingly below expectation. News then moved over to the US as all eyes focused in on unemployment claims. The claims figure came in less than expected, falling last week on the improving job market. Other US data also came in better than expected, notably nonfarm productivity and unit labour costs. Comments from BoE policymaker Posen saw Sterling fall from yesterday highs versus the Greenback as he talked about leaning towards 75 billion in extra QE. He also went on to express confidence that other central bankers will join him in his vote towards a further cash injection. Possibly a little safe haven investor interest in the US dollar dragging on cable as no news of an agreed deal in Greece. GBP/USD has recovered for the start of today’s session, but remains within the 50 pip movement seen yesterday. The range for the currency pair has been 1.5790 / 1.5840 in the past 24 hours and we open this morning at 1.5830. US non-farm payrolls (NFP) and services PMI data are both worth monitoring today.

- We expect a range today in the GBP/USD rate of 1.5740 to 1.5860

:: Euro: The single currency continues to be weighed on by the ongoing Greek debt concerns. A lack of data from Europe yesterday meant markets monitored development in the Greece saga closely, but once again no new headway seems to have been made as no incentive for Greek creditors to voluntarily agree on a debt write down has been made. It was this time last week a resolve was assured, but we seem to be no closer with negotiations remaining difficult. Despite this, we are still being assured a deal is close. EUR/USD failed to break 1.3200 yesterday due to this and opens this morning at 1.3154. GBP/EUR opens this morning at 1.2032. Some good news from Europe worth mentioning, Thursday saw Spain and France gain respite at bond auctions as they drew healthy demand and saw their borrowing costs tumble. No data due for release in Europe again today, so US NFP and Greek developments will likely rule single currency movement today.

- We expect a range today in the GBP/EUR rate of 1.1960 to 1.2090

:: Aussie and Kiwi Dollars: The Aussie and Kiwi are back up at the highs versus the Greenback. US data yesterday, as mentioned above, supported the risk trade during the US session, but a lack of development from Greece and a poor Chinese PMI release overnight had pulled risk back off. This saw AUD/USD dip down to 1.0673 and NZD/USD fall to 0.8297. These losses have been corrected this morning however with comments from Chinas premier Wen stating China will aid Europe’s bailout-program. AUD/USD currently sits at 1.0710 and NZD/USD opens at 0.8322. Sterling remains low versus the antipodean currencies and the pairs open at GBP/AUD 1.4792 and GBP/NZD 1.9030.

- We expect a range today in the GBP/AUD rate of 1.4690 to 1.4860

- We expect a range today in the GBP/NZD rate of 1.8910 to 1.9140

:: Data Releases:

  • AUD: No data due for release today
  • EUR: Retail Sales m/m
  • GBP: Services PMI
  • NZD: No data due for release today
  • USD: Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings m/m, ISM Non-Manufacturing PMI, Factory Order m/m

    If you want instant updates on movements in the FX market and fast access to the UKForex daily commentary, follow us on twitter at http://twitter.com/ukforex or @ukforex

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