UKForex Daily Forex Commentary

Daily Forex Commentary - Wednesday, 08 Sep 2010

Wed, 08 Sep 2010 08:06:53:753 GMT

:: United States Dollar: The dollar strengthened slightly throughout the day yesterday, but these gains have been reversed early this morning on the release of UK house price data in the form of the Halifax House Price Index which came in at 0.2% versus an expected fall of 0.3%. This positive data seems to have taken the attention from Connaught, who are to enter administration. Connaught, the housing maintenance company has over 10,000 employees whose jobs are now at risk. GBP/USD fell from 1.5420 to 1.5300 levels yesterday, but has subsequently rallied to levels above 1.5460 this morning. We have a couple of important data releases in the UK and US – with UK Manufacturing Production at 09:30 GMT and the US Fed’s Beige Book at 19:00 GMT.

- We expect a range today in the GBP/USD rate of 1.5375 to 1.5560

:: Euro: The Euro continued to fall yesterday as the markets digested news surrounding the validity of the stress tests conducted in July. EUR/USD fell by 1.5% throughout the day yesterday, from 1.2875 to 1.2676 overnight. Further comments concerning Greek government debt out this morning are likely to ensure that the Euro remains under pressure in the short term. Analysts have highlighted that investors still don’t trust Greece, and are demanding yields (interest payments) five times that of German government debt. For more see http://bit.ly/d15gg1. We have German industrial production out this morning at 11:00 GMT.

- We expect a range today in the GBP/EUR rate of 1.2100 to 1.2260

:: Aussie and Kiwi Dollars: Trading in the antipodean currencies was volatile yesterday, driven by risk sentiment. AUD/USD fell from 0.9170 to 0.9095 before recovering into the end of the London business day. Overnight it headed south once more but has subsequently recovered to levels back up at 0.9150. Housing loan data out from the Australian Bureau of Statistics showed a seasonally adjusted rise in home loans to 1.7% in July. Economists had been expecting an increase of only 1%. Housing data is likely to remain volatile in the short term and will be closely monitored by the RBA who are currently reviewing their interest rate tightening cycle. In New Zealand the Treasury Department has revised estimates of the potential cost of the recent earthquake. Analysts reckon that costs could exceed NZD 4 billion, impacting spending decisions in the medium to long term. NZD/USD fell from a high just above 0.7240 yesterday to a low of 0.7160 this morning. We open slightly higher at 0.7190. On the data front we have Australian employment figures out early tomorrow morning.

- We expect a range today in the GBP/AUD rate of 1.6750 to 1.6970

- We expect a range today in the GBP/NZD rate of 2.1350 to 2.1570

:: Data Releases:

AUD: Employment Change / Unemployment Rate
EUR: German Industrial Production
GBP: Manufacturing Production / Industrial Production
NZD: No data of note
USD: Fed''s Beige Book

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Daily Forex Commentary - Tuesday, 07 Sep 2010

Tue, 07 Sep 2010 08:28:43:123 GMT

:: United States Dollar: Despite it being a bank holiday in the US yesterday the currency markets were relatively volatile. A fresh bout of risk aversion drove the dollar higher against a basket of currencies, and comments from retired Fed Vice Chairman Donald Kohn renewed concerns about a possible slowdown in the recovery. Kohn, who retired last week, has argued that the Federal Reserve must implement fresh stimulatory measures should unemployment continue to increase. There are many contrasting opinions within the Fed however, and Thomas Hoenig from the Kansas Fed believes the economy would not benefit from further measures. In the UK BRC retail sales data came in higher than expected at 1% (versus an expectation of an increase of only 0.5%). This is a front-runner for official government retail sales figures and provides much needed optimism in the short term. GBP/USD fell to 1.5345 from a high of 1.5490 yesterday. Overnight the pound traded between 1.5360 / 80 levels and has rallied this morning on open to 1.5420. There is little out in the way of data today.

- We expect a range today in the GBP/USD rate of 1.5320 to 1.5480

:: Euro: The Wall Street Journal is running an article today regarding the results of the stress tests conducted on European banks in July. It contains evidence that EU banks underestimated their exposure to sovereign debt, thus impacting the validity and credibility of the CEBS’s tests. This has weighed on the Euro which has fallen by 1% from 0.8390 to 0.8300 where we open this morning. For more on this go to - http://bit.ly/bRyWmh. This has provided a short term boost for importers but may be short lived. There are a number of important data releases coming up in the next couple of weeks that are likely to drive volatility. We have German factory orders out at 11:00 GMT today.

- We expect a range today in the GBP/EUR rate of 1.1950 to 1.2090

:: Aussie and Kiwi Dollars: The Aussie held firm yesterday despite a move to safe haven assets, trading within a tight 35 point range for most of the day. The RBA kept rates on hold as expected but the statement alongside the release alluded to possible further rises before the end of the year - http://www.rba.gov.au/media-releases/2010/mr-10-20.html. AUD/USD traded down to 0.9110 levels where we open this morning. In New Zealand there are a number of articles in the financial press this morning discussing persistent concerns about the extent of the recent strength of the Kiwi despite a number of economic and geographical events that would normally be expected to drive a currency lower. Analysts believe that the full impact of the recent earthquake is yet to be calculated and this may weigh on the NZ dollar going forward. We open at 0.7190 levels this morning.

- We expect a range today in the GBP/AUD rate of 1.6750 to 1.6970

- We expect a range today in the GBP/NZD rate of 2.1230 to 2.1450

:: Data Releases:

AUD: Home Loans
EUR: German Factory Orders
GBP: No data of note
NZD: Manufacturing Sales
USD: No data of note

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Daily Forex Commentary - Monday, 06 Sep 2010

Mon, 06 Sep 2010 08:13:06:320 GMT

:: United States Dollar: The dollar gave back some ground on Friday last week with risk sentiment slightly improved on the back of better than expected jobs data out of the US. Non-farm payrolls came in at -54,000 versus an expectation of a drop of 101,000. In the run up to the release there was speculation that figure would yield worse than expectation, and we briefly saw an increase in treasury yields on the back of a flight to safety. This was undone on the release however, and the Pound benefitted from the positive news rallying from 1.5400 levels to beyond 1.5465. In the UK the Reed Jobs Index, a measure of job vacancies, fell in August. The index fell to 64 last month (anything over 100 represents an increase), highlighting the fragility of the recovery in the UK. Job vacancies and unemployment are likely to remain volatile in the near term as businesses measure the impact of tax changes before making capital expenditures (new machinery and staff etc.). There’s news of a tax error by HM Revenue and Customs, with a reported 10 million people believed to have paid too much income tax. Don’t be too hasty in expecting a cheque however, 1.4 million people are believed to owe an average of £1,500 as they have underpaid. It’s a US holiday today so trading may be less volatile than normal.

- We expect a range today in the GBP/USD rate of 1.5410 to 1.5520

:: Euro: It seems that German data is in vogue at present, with little attention being paid to simmering issues in southern Europe, according to analysts. The EU’s largest economy is set to post better than expected factory order figures tomorrow, pointing to a continued and sustained path to economic recovery. This comes despite many other EU countries are still mired in the depths of fiscal austerity, most notably Greece, Ireland and Spain. Whilst we have yet to hear more details about the planned “bailout vehicle” proposed as a joint venture between the ECB and the IMF, data releases such as these are likely to boost short term risk sentiment and help (reduce funding costs) the southern EU states. EUR/USD traded from as low as 1.2809 up to 1.2918 this morning. We open slightly lower at 1.2890 levels. Again, US Labor Day today but we do have Sentix investor confidence data out at 09:30.

- We expect a range today in the GBP/EUR rate of 1.1920 to 1.2030

:: Aussie and Kiwi Dollars: The Aussie benefitted from the payroll data release in the US and rallied sharply on the back of improved risk sentiment. AUD/USD traded up from 0.9105 seconds before the release to 0.9175. The currency remained elevated against a basket of other currencies, and despite news from the RBA overnight concerning interest rates (http://bit.ly/c0saRS), we open at 0.9170 this morning. ANZ Job Advertisements rose by 2.6% during the month of August, further supporting the economic outlook down under. In New Zealand, despite news of a severe earthquake in Christchurch, the Kiwi remains elevated against a basket of currencies. NZD/USD traded from a low of 0.7130 on Friday up to 0.7220 after non-farm data. It continues to strengthen, opening this morning at 0.7237.

- We expect a range today in the GBP/AUD rate of 1.6730 to 1.6930

- We expect a range today in the GBP/NZD rate of 2.1230 to 2.1430

:: Data Releases:

AUD: AIG Construction Index
EUR: Sentix Investor Confidence
GBP: No data of note
NZD: No data of note
USD: Labor Day (bank holiday)

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Daily Forex Commentary - Friday, 03 Sep 2010

Fri, 03 Sep 2010 08:48:18:763 GMT

:: United States Dollar: The dollar strengthened slightly throughout the course of the trading day yesterday, and wasn’t particularly volatile despite a few data releases and a statement to congress by Fed Chairman Ben Bernanke. Unemployment claims came in as expected, and pending home sales managed to surprise to the upside despite most analysts expecting a drop compared to the previous month. Data releases remain volatile, and it is increasingly difficult to draw accurate conclusions from such fundamental news. In his testimony to congress Bernanke alluded to the expectation of more banks to break up as a result of impending regulatory changes, which may impact bank’s willingness to lend. In the UK the fallout from house price data continued to plague the sterling markets, and economists turned their attentions to estimates of the potential downturn in house prices in the coming months. GBP came under pressure across the board and fell lower against both the Dollar and the Euro. GBP/USD fell by 100 points to 1.5350 and GBP/EUR fell by 98 points to 1.1980. We have non-farm payrolls out today from the US (13:30 GMT) and Services PMI from the UK.

- We expect a range today in the GBP/USD rate of 1.5320 to 1.5500

:: Euro: The Euro traded in a particularly tight range yesterday, reaching levels above 1.2845 but not falling below levels around 1.2780 against the USD. Early data releases came in as expected and did little to provide momentum, with PPI, GDP and interest rate decision all coming in bang on target. There is news out this morning surrounding proposed changes to regulatory policy in the EU, with mention of the creation of a “super-regulator” to directly oversee banking activities in the Eurozone. For more see - http://bit.ly/aHbYRw. Retail sales figures are out at 10:00 GMT, and there’s possibility of a bit of momentum around 13:30 on the release of non-farm data.

- We expect a range today in the GBP/EUR rate of 1.1975 to 1.2100

:: Aussie and Kiwi Dollars: Both the Aussie and the Kiwi managed to hold ground yesterday, despite a slight tendency toward risk aversion in the markets. There was little out in the way of data and markets were relatively range bound. There is an interesting article on mortgage debt and rising house prices in The Australian this morning, and goes someway to explaining the risks of house price inflation in the coming months / years - http://bit.ly/d1K97g. AUD/USD fell to 0.9055 before recovering to levels around 0.9120. We open lower this morning as investors position themselves ahead of non-farms. In New Zealand the South Canterbury Finance issue still dominates pages of the financial press as investors pick over possible implications of the bailout. Pressure still remains on the Kiwi as a result and economists have encouraged caution when considering any NZ related asset purchases whilst the issue unfolds. NZD/USD hit a high of 0.7180 before retreating to levels around 0.7150.

- We expect a range today in the GBP/AUD rate of 1.6820 to 1.7020

- We expect a range today in the GBP/NZD rate of 2.1400 to 2.1600

:: Data Releases:

AUD: No data of note
EUR: Retail Sales
GBP: Services PMI
NZD: No data of note
USD: Non_farm Payrolls / Unemployment Rate / ISM Non-Manufacturing Index

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Daily Forex Commentary - Thursday, 02 Sep 2010

Thu, 02 Sep 2010 08:46:57:397 GMT

:: United States Dollar: The dollar gave back some of its weekly gains yesterday, and trading focused on re-establishing long positions in risk currencies. US manufacturing PMI surprised to the upside, defying expectations of a fall in business conditions. PMI figures came in at 56.3 versus an expectation of a fall to 53.2 (from a previous figure of 55.5). Anything above 50 indicates industry expansion, so the figures provided short term relief from a downturn in sentiment. Equities rallied and the dollar sold off as investors jumped on the yield bandwagon. In the UK house prices fell again following July’s drop of 0.5%. House prices fell in August by 0.9%, further undermining the Bank of England’s efforts to keep rates low to facilitate cheaper credit. Despite rates being at record lows since 5th Mar 2009, it is clear that banks are hoarding cash to boost balance sheets rather than lend out to businesses and individuals. After a positive move north GBP/USD gave back gains and fell from a high of 1.5490 to 1.5380. We open slightly higher at 1.5400 levels this morning.

- We expect a range today in the GBP/USD rate of 1.5320 to 1.5480

:: Euro: The Euro benefitted from improved risk sentiment as investors felt comfortable switching from the safety of the dollar to the relatively risky single currency. Manufacturing PMI in the EU came in close to expectation, and the markets took comfort from the fact that most data releases have not been to disastrous (far below expectation). There are a few interesting articles out this morning pertaining to ECB stimulus policy - http://bit.ly/9wJFQC, and a very interesting piece from the Assistant Financial Editor of the Telegraph regarding Greek debt - http://bit.ly/9bKHWe. EUR/USD rallied from 1.2660 levels at the beginning of the day yesterday, to a high of 1.2855. We open slightly lower at 1.2820 this morning and have ECB policy statement to look forward to this afternoon (13:30 GMT) following the rate decision.

- We expect a range today in the GBP/EUR rate of 1.1950 to 1.2090

:: Aussie and Kiwi Dollars: An improvement in risk sentiment drove the Aussie higher against a basket of currencies, and positive Chinese news, in the form of manufacturing PMI data, boosted prospects for export growth. Trade balance figures in Aus came in slightly worse than expected, but the Chinese news trumped these and gave fresh optimism for economic growth. Many analysts have noted that whilst this short term data is positive, it is important to remember how volatile Chinese economic figures are, and to keep that in mind when establishing new positions. AUD/USD moved from 0.8920 levels up to a high of 0.9117, levels not seen since early August. In New Zealand risk appetite benefitted the Kiwi which rallied from 0.6990 to a high of 0.7150 where we open this morning. Despite there being no data releases of note the NZ dollar has remained particularly volatile, and is still most definitely at the mercy of risk sentiment rather than of fundamentals (despite a record bailout NZD has still pushed higher against a basket of currencies for example).

- We expect a range today in the GBP/AUD rate of 1.6820 to 1.7020

- We expect a range today in the GBP/NZD rate of 2.1400 to 2.1600

:: Data Releases:

AUD: AIG Services Index
EUR: ECB Rate decision / Trichet Press Conference
GBP: No data of note
NZD: No data of note
USD: Unemployment Claims / Bernanke Testifies / Pending Homes Sales

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Daily Forex Commentary - Wednesday, 01 Sep 2010

Wed, 01 Sep 2010 08:39:49:577 GMT

:: United States Dollar: Investors continued to buy dollars yesterday, shunning risky products for the safety of US treasuries. Yields across the yield curve (percentage return on bonds of different maturities) fell and equities dropped as people switched into safe haven assets. The Dow Jones managed to recovery slightly from lows before close, but still finished around the 10,000 mark (having fallen from 10,220 on Monday). On a monthly basis the Dow finished 4.3% lower, reflecting worsening fundamentals in the US economy. FOMC minutes released last night contained mentions that some members of the FOMC saw “increased downside risks to the outlook for both growth and inflation”. This was taken by many as a public declaration that the Fed is aware of possible risks, but there was little mention of further stimulus measures – something analysts and economists will want to know about in the coming days. The story is similar in the UK with press articles out this morning pertaining to a “double-dip” recession, and discussion over the path of house prices. Mortgage lending fell to 518 million pounds in July, well below the 700 million that economists had been expecting. These figures reflect tighter lending conditions and consumers’ unwillingness to buy property at the moment. In the medium term this will put downward pressure on house prices and filter through to real incomes (falling property values erode borrowing ability). GBP/USD fell from 1.5480 levels to a low of 1.5330 overnight. We open higher at 1.5400 this morning. We have manufacturing PMI out in the UK today.

- We expect a range today in the GBP/USD rate of 1.5300 to 1.5480

:: Euro: The Euro managed to recover a bit of ground yesterday on positive movements in the credit markets. Credit default swaps (a form of insurance on corporate bonds) fell, reflecting improved sentiment towards EU companies. CPI and unemployment data came in as expected, which given the current climate is good news. European equities also benefitted from the positive news and regained ground after Monday’s fall. German retail sales out this morning came in slightly lower than expected but did little to dent current enthusiasm for all things Euro. EUR/USD rose from a low of 1.2625 to a high of 1.2740 towards the beginning of the US session before giving back some of these gains. We open this morning back up at the highs around 1.2735.

- We expect a range today in the GBP/EUR rate of 1.2080 to 1.2180

:: Aussie and Kiwi Dollars: Stronger than expected GDP figures pushed the Aussie higher against a basket of currencies overnight. GDP data for the second quarter came in at 1.2% versus an expected increase of 0.9%. A slight improvement in risk sentiment coupled with this good news drove AUD/USD from a daily low of 0.8860 yesterday to levels well above 0.9010 where we open this morning (a 1.7% increase). A few analysts are advising to approach fresh long positions with caution, as a repeat of price action on Monday (when a sharp rally was countered with a gradual sell-off) could see investors squeezed out, putting further downward pressure on the currency. In New Zealand the South Canterbury Financial bailout continues to plague markets, with many analysts re-approaching forecasts for the upcoming RBNZ rate decision. Economists rightly point out the Fitch, the ratings agency, already have the NZ Government on Negative Outlook, and with conservative estimates for the cost of bailout coming to NZD 0.6bn, this could drive NZD lower. NZD/USD fell yesterday, moving from a high of 0.7050 down to levels around 0.6965.

- We expect a range today in the GBP/AUD rate of 1.6950 to 1.7150

- We expect a range today in the GBP/NZD rate of 2.1700 to 2.2000

:: Data Releases:

AUD: Trade balance figures
EUR: No data of note
GBP: Manufacturing PMI / Nationwide House Prices (tomorrow morning)
NZD: No data of note
USD: ISM Manufacturing PMI / ADP Non-Farm Employment Change

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Daily Forex Commentary - Tuesday, 31 Aug 2010

Tue, 31 Aug 2010 08:34:03:113 GMT

:: United States Dollar: The dollar continues to hold ground on most other currencies, as risk aversion trades come to the fore once again. Worse than expected manufacturing and consumer spending data from the US highlights the grim prospects for economic outlook in the short to medium term. Disposable income fell in July for the first time since January (this was after inflation and tax adjustment), sending the Dow Jones index of leading shares down by 1.4%. Investors turned once more to US treasuries which benefitted from the flight to safety. Despite better than expected consumer confidence in the UK the Pound failed to make any ground against a basket of currencies. Consumer Confidence, measured by GfK/NOP, rose to -18 from a previous reading of -22. Many have warned that although the data is positive, and a step in the right direction, it is important to remember that unemployment remains high and such gains in confidence may not continue. GBP/USD fell from 1.5577 at the end of last week, to 1.5400 levels where we open this morning. Today we have Chicago PMI out from the States and Net Lending to Individuals out from the UK.

- We expect a range today in the GBP/USD rate of 1.5350 to 1.5500

:: Euro: The Euro also suffered from the flight to safety despite positive consumer confidence data. Both business and consumer confidence in the 16-nation economic union rose, but at a slower pace than expected. The economic sentiment indicator, conducted by the European Commission, rose to 101.8 from a July reading of 101.1. Economists noted that whilst unemployment remains high, fears of an increase have subsided giving consumers increased optimism regarding spending conditions in the near future. EUR/USD fell from 1.2780 at the end of last week to levels below 1.2630. We open at 1.2670 this morning.

- We expect a range today in the GBP/EUR rate of 1.2120 to 1.2250

:: Aussie and Kiwi Dollars: The Aussie rallied sharply towards the end of last week, most likely on the back of comments from Fed Chairman Ben Bernanke who spoke on Friday. AUD/USD rose from levels around 0.8860 to over 0.9020 over the course of Friday evening, but the currency pair has given back most of these gains to start the day at levels around 0.8900. There was positive data out from Australia in the form of current account deficit figures, which are now down at levels not seen since 1989. Analysts note that this is due to the current mining boom which has bumped up tax revenues. In New Zealand negative news regarding significant lender South Canterbury Finance (SCF) has raised concerns about the ability of NZ’s financial institutions to fund themselves during these unprecedented times. SCF called in the receivers, and the Government paid out over 1.6 billion NZD to investors under the Retail Deposit Guarantee Scheme. NZD/USD fell from levels around 0.7140 on Friday last week, to 0.6980 this morning. We open slightly higher at 0.7000.

- We expect a range today in the GBP/AUD rate of 1.7200 to 1.7400

- We expect a range today in the GBP/NZD rate of 2.1900 to 2.2120

:: Data Releases:

AUD: AIG Manufacturing Index / GDP q/q
EUR: CPI Flash Estimate / Unemployment Rate
GBP: Net lending to individuals
NZD: ANZ Commodity Prices
USD: Chicago PMI / CB Consumer Confidence / FOMC Minutes

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Daily Forex Commentary - Monday, 30 Aug 2010

Mon, 30 Aug 2010 08:54:05:973 GMT

:: United States Dollar: Sterling has risen against the US Dollar for this morning’s start. Friday saw both the UK and US GDP growth revised. Growth in the UK was unexpectedly revised higher to show an increase on 1.2 % on the quarter in Q2 and a rise of 1.7 % on the year. This being the fastest growth for the UK since 2001 as companies rebuilt stock and construction work surged. A marginal rally was seen for the Pound against the US Dollar on this release. However, the US GDP growth saw a downwards revision from 2.4 % to 1.6 %. The initial Greenback positive movement was soon erased on the back of this release. All eyes then turned to Bernanke’s speech at Jackson Hole. Bernanke talked about adding further stimulus steps if necessary and mentioned a surprising option of lifting inflation goals to boost the economy. Subtly, the situation is dire that Dollar printing steps are considered. Sterling, despite falling to a session low of 1.5450 on Friday, now sits back up closer to recent highs and opens today at 1.5563. It is a Bank holiday in the UK today.

1.5450 to 1.5610

:: Euro: The single currency also begins the day higher against the US Dollar. As mentioned in Friday’s commentary, there was no top tier European data to end last week so all eyes were on the US session and Bernanke’s speech. The speech saw risk turned on as quickly it was turned off and EUR/USD saw a 50 pip loss on the back of this taking the pair to a session low of 1.2685. Having said this, these losses have been rectified for this morning’s start and the currency pair has pushed higher. EUR/USD is currently sitting at 1.2728. Sterling remains within recent ranges against the Euro. Movement for the currency pair has remained flat of recent and this morning brings no change. Pound does sit above 1.2200 versus the Euro and opens at 1.2224.

- We expect a range today in the GBP/EUR rate of 1.2190 to 1.2260

:: Aussie and Kiwi Dollars: It seems the majority of currencies have gained against the US Dollar and the Aussie and Kiwi are of no exception. As the Asian markets opened early this morning, swallowing Ben Bernanke’s speech, the antipodean currencies have both seen jumps against the Greenback. The Australian Dollar has broken 0.9000 and New Zealand Dollar 0.7100. These gains also supported by the emergency BOJ meeting, despite the outcome not meeting market expectation, and also on positive Australian releases. AUD/USD opens this morning at 0.8985 and NZD/USD is currently at 0.7100. Sterling has seen losses against the Aussie and Kiwi overnight on the back of this and opens at 1.7318 and 2.1922 respectively.

- We expect a range today in the GBP/AUD rate of 1.7190 to 1.7440

- We expect a range today in the GBP/NZD rate of 2.1750 to 2.2050

:: Data Releases:

AUD: RBA Assistant Governor Debelle Speaks, Building Approvals m/m, Retail Sales m/m, Current Account, Private Sector Credit m/m
EUR: No data due for release today
GBP: GfK Consumer Confidence
NZD: Building Consents m/m
USD: Core PCE Index m/m, Personal Spending m/m, Personal Income m/m, FOMC Member Bullard Speaks

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Daily Forex Commentary - Friday, 27 Aug 2010

Fri, 27 Aug 2010 08:17:53:310 GMT

:: United States Dollar: Markets have traded a fairly quiet range over the last 24 hours in advance of an important data day, being UK and US GDP and Fed Chairman Ben Bernanke's first speech since the Fed announcement that it would be buying long term treasuries with income from holdings of mortgage bonds. It is a much anticipated speech. Cable traded to a high of 1.5590 yesterday, buoyed in part by solid UK CBI realised sales data released that morning. It has fallen back slightly overnight and opens this morning at 1.5505. UK GDP and US GDP data are of course very important but both releases might be overshadowed by Bernankes comments later today. It might be a volatile session particularly so come end of day.

- We expect a range today in the GBP/USD rate of 1.5410 to 1.5640

:: Euro: EUR/USD has also traded a pretty dull range over the last day between 1.2680 and 1.2750. There is no top tier European data to report on either and the pair is likely to trade perhaps an even narrower range in the run up to Bernankes speech in Jackson Hole this afternoon. His comments are likely to impact on EUR/USD this afternoon and evening but may also reverberate into early Monday morning after Asia has been given the time to react. GBP/EUR hasnt done much either, having slipped from 1.2200, opening this morning at 1.2190.

- We expect a range today in the GBP/EUR rate of 1.2150 to 1.2240

:: Aussie and Kiwi Dollars: It comes as no surprise that AUD/USD and NZD/USD have both traded a flat range as markets gear up to Bernankes speech. Asian stocks have also been sluggish in advance of the data and official comments. AUD/USD opens at .8880 whilst NZD/USD trades at .7040 currently. Not much to report on the cross front either Im afraid as GBP/AUD and GBP/NZD trade at 1.7475 and 2.2015 respectively, both very slightly lower from yesterdays opening levels.

- We expect a range today in the GBP/AUD rate of 1.7390 to 1.7560

- We expect a range today in the GBP/NZD rate of 2.1910 to 2.2120

:: Data Releases:

AUD: No data due for release today
EUR: German Prelim CPI m/m
GBP: GDP, Prelim Business Investment, Index of Services
NZD: No data due for release today
USD: GDP, Revised Consumer Sentiment, Revised Inflation Expectations, Bernanke speech

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Daily Forex Commentary - Thursday, 26 Aug 2010

Thu, 26 Aug 2010 08:33:13:183 GMT

:: United States Dollar: US economic data continues to be weak. Durable goods orders released yesterday rose only 0.3% vs. expectations for a 3% rise whilst new home sales dropped in July to the lowest level on record of 276,000. The US dollar has actually weakened since the release of this data and GBP/USD has pushed back above the 1.5500 figure. This is a strange situation given that weak US data of late has usually meant markets offload risk and buy the USD. Continually poor US data is now leading markets to question the status of the dollar as a safe haven currency. There is more US data due today by way of unemployment claims although the main focus is likely to be on UK and US GDP figures released tomorrow.

- We expect a range today in the GBP/USD rate of 1.5480 to 1.5600

:: Euro: EUR/USD slipped to a low of 1.2615 yesterday but has since pushed on overnight to open this morning at 1.2710. This comes in part following the US data but the single currency has also been supported by solid German Ifo Business Climate data, this having been released yesterday morning. We have also seen some decent sovereign buying of EUR/USD in Asia which is supporting the currency too. GBP/EUR has made what looks like a convincing break of 1.2200 overnight and trades this morning at 1.2230.

- We expect a range today in the GBP/EUR rate of 1.2180 to 1.2270

:: Aussie and Kiwi Dollars: AUD/USD fell from .8880 to .8780 and NZD/USD from .7060 to .6690 yesterday morning. In contrast to both GBP and EUR the risk averse market sold AUD and NZD following the weak US data yesterday. The Aussie dollar was also left hurting as it seems that the Australian Independents are happy with the mining tax, although the market awaits more news around this. Since falling to their respective lows both AUD/USD and NZD/USD have recovered overnight buoyed by a rebound on world and local stock markets. AUD/USD and NZD/USD open this morning at .8870 and .7035 respectively. GBP/AUD and GBP/NZD are also higher and trade at 1.7515 and 2.2090 both having traded to highs of 1.7590 and 2.2190 yesterday.

- We expect a range today in the GBP/AUD rate of 1.7440 to 1.7590

- We expect a range today in the GBP/NZD rate of 2.2010 to 2.2230

:: Data Releases:

AUD: No data due for release today
EUR: Money Supply, Private Loans
GBP: CBI Realised Sales
NZD: No data due for release today
USD: Unemployment Claims, Mortgage Delinquencies

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Daily Forex Commentary - Wednesday, 25 Aug 2010

Wed, 25 Aug 2010 08:32:17:050 GMT

:: United States Dollar: US housing data caused a temporary blip in the US dollar yesterday. GBP/USD rallied to 1.5480 from 1.5380 after figures showed that US existing home sales fell 27.2% in July, this being a record monthly drop. Markets then turned risk averse soon after, as the data does of course suggest that the US economic recovery is a little way off yet. The Dow ended 1.32% down and the FTSE and Nikkei fell 0.23% and 1.66% respectively. The haven USD firmed as a result. GBP/USD retreated back towards the 1.5400 figure again and has done little overnight. It opens this morning and 1.5402. Attention will once again be on US data this afternoon which includes Durable Goods and New Home Sales.

- We expect a range today in the GBP/USD rate of 1.5390 to 1.5510

:: Euro: EUR/USD has copied GBP/USD rising from 1.2600 to 1.2695 on the back of the US housing data. It did not last long as risk selling took grip and most currencies vs. the US dollar were sold. It wasn't long before EUR/USD fell back to 1.2620 and it opens this morning at 1.2660. Risk selling was stoked further by news that S&P lowered Irelands credit rating to AA-. German IFO Business Climate figures have just been released however and have beaten expectations which in turn is supporting the single currency this morning in advance of key US data this afternoon. GBP/EUR has been pretty quiet, enjoying a few breaks of 1.2200. It trades at 1.2160 currently.

- We expect a range today in the GBP/EUR rate of 1.2110 to 2.2190

:: Aussie and Kiwi Dollars: AUD/USD has traded a very steady .8815/.8870 range over the last 24 hours and is holding up surprisingly well amid risk averse global markets, falling stock prices in the last 24 hours and national election uncertainty. In fact it has just broken out of its 24 hour range and opens this morning at .8890. Data released overnight by way of Australian construction data was better than expected, leading markets to believe that Australian GDP, due next week might also be good. NZD/USD has been a little more volatile, reacting to global risk sentiment and US data like GBP/USD and EUR/USD have done. It opens this morning at .7060. GBP/AUD has trickled lower on London opening and sits at 1.7365 this morning whilst GBP/NZD trades at 2.1875 - the lower end of the last 24 hour range.

- We expect a range today in the GBP/AUD rate of 1.7290 to 1.7410

- We expect a range today in the GBP/NZD rate of 2.1800 to 2.1940

:: Data Releases:

AUD: CB Leading Index, Private Capital Expenditure
EUR: No data due for release today
GBP: No data due for release today
NZD: No data due for release today
USD: Durable Goods, New Home Sales

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Daily Forex Commentary - Tuesday, 24 Aug 2010

Tue, 24 Aug 2010 08:25:15:780 GMT

:: United States Dollar: The dollar strengthened considerably against a basket of currencies overnight, on fresh fears of a “double-dip” recession. Reports from economists highlight that recent talk of austerity measures and cutting the US budget deficit will negatively affect economic outlook and prospects for growth in the long term. Democrats in the States have mentioned cutting tax benefits in an attempt to reduce the amount the treasury has to borrow. Investors took fright and piled into safe haven currencies and products, meaning that despite the possible negative outlook the dollar strengthened. In the UK economists are talking about a turnaround in sentiment for growth prospects, fuelled by concerns about spending cuts which investors / businesses fear will adversely affect productivity. GBP/USD fell from a high of 1.5620 yesterday to 1.5380 this morning, a fall of 1.5%. We have BBA mortgage approval data this morning in the UK and existing home sales in the US.

- We expect a range today in the GBP/USD rate of 1.5300 to 1.5460

:: Euro: The Euro took no comfort from the flock to safe haven assets, and fell from a high of 1.2730 yesterday, to a low this morning of 1.2615 levels where we open. Negative news surrounding Greeks banks did little to help sentiment either. News that Greek banks are under pressure to consolidate to boost balance sheets has once more heightened concerns that banks there still don’t have easy access to funding, and that big risks to the wider EU economy still remain. Investors are growing ever more worried about worsening asset quality held on Greek banks balance sheets, and with the introduction of higher levels of tax (VAT on food to 23% and 31% on alcohol), people rightly fret about the prospects for recovery. We have industrial orders out of the EU later today.

- We expect a range today in the GBP/EUR rate of 1.2160 to 1.2250

:: Aussie and Kiwi Dollars: The Aussie dropped from a high of 0.8983 yesterday, to a low of 0.8835 this morning where we open. A move away from risky assets did little to benefit the high yielder, and political uncertainty continues to weigh on outlook going forward. Australian stocks fell by 1%, investors described the situation as being in limbo, as negotiations continue between MP’s trying to secure an election outcome. In M&A news, Rio Tinto is considering a bid for PotashCorp, the Canadian mineral miner. Any potential deal, which may include cash payment, could be a negative outflow for the Australian dollar. In New Zealand the US rush also drove down the Kiwi from a high of 0.7123 yesterday to a low of 0.7010 this morning. Inflation expectations fell slightly in the most recent survey, probably on the back of an expectation that recent policy moves may dampen price growth. As high inflation seems to have been priced into the currency, there’s a possibility that a reduction in inflation may put downward pressure on the Kiwi in the medium to long term.

- We expect a range today in the GBP/AUD rate of 1.7300 to 1.7500

- We expect a range today in the GBP/NZD rate of 2.1850 to 2.2020

:: Data Releases:

AUD: Construction Work Done
EUR: Industrial Orders
GBP: BBA Mortgage Approvals
NZD: No data of note
USD: Existing Home Sales / Richmond Manufacturing Index

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Daily Forex Commentary - Monday, 23 Aug 2010

Mon, 23 Aug 2010 08:50:58:223 GMT

:: United States Dollar: GBP/USD finally fell below 1.5500 on Friday amid a lack of economic data from either side of the pond. It fell to 1.5464 in the afternoon as markets initiated another round of risk selling. Both the FTSE and Dow finished lower on Friday as concerns over any economic recovery in either country lingers on. The pound has recovered since however, pushing higher vs. most of the majors through Asia and most of the early European session. This comes despite some attention being apportioned to an interesting article in The Telegraph over the weekend which pointed to a recent report which suggests that interest rates may rise to 8% in 2 years to stave of rising inflation. There is no UK data of note due today. Later in the week we will see the release of US Durable Goods Orders and US and UK GDP figures.

- We expect a range today in the GBP/USD rate of 1.5490 to 1.5660

:: Euro: EUR/USD fell further on Friday. It slipped to 1.2670 after starting the day at 1.2760 on Friday. This came following some bearish comments from ECB official Weber who said that the ECB should help European banks through end of year liquidity issues. The single currency was also hit by the risk averse nature of markets on Friday and concerns over a US led economic recovery. EUR/USD has traded a quiet range through the Asian session and opens this morning at 1.2705. German and French PMI manufacturing and services data have failed to do anything for it this morning. The recent mild recovery in GBP/USD and flat range in EUR/USD has meant that GBP/EUR has pushed closer to 1.2300 this morning. It opens at 1.2260.

- We expect a range today in the GBP/EUR rate of 1.2210 to 1.2285

:: Aussie and Kiwi Dollars: The focus in Australia in the last week has been on the results of the latest national election which were due this weekend. It is unclear however who holds the majority and a hung parliament has resulted. With global risk demand also waning on Friday the Aussie dollar fell to a low of .8840. Election uncertainty persists this morning, but AUD/USD has recovered. Any formation of a coalition government will require negotiation with independent parties, the vast majority of which are opposed to the mining tax. This has helped AUD/USD to recover. NZD/USD in comparison has been fairly quiet and opens this morning at .7070. Both GBP/AUD and GBP/NZD are higher and trade at 1.7440 and 2.2030 respectively.

- We expect a range today in the GBP/AUD rate of 1.7360 to 1.7540

- We expect a range today in the GBP/NZD rate of 2.1940 to 2.2190

:: Data Releases:

AUD: No data due for release today
EUR: Consumer Confidence
GBP: No data due for release today
NZD: Inflation Expectations
USD: No data due for release today

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Daily Forex Commentary - Friday, 20 Aug 2010

Fri, 20 Aug 2010 08:30:49:040 GMT

:: United States Dollar: The pound rallied yesterday following the release of better than expected UK retail sales data. Sales rose by 1.1% in July vs. forecasts for a 0.4% rise. GBP/USD rose immediately back through the 1.5600 figure on the news, eventually trading to a high of 1.5660. The break failed to gather momentum however as US data soon put a stop to the rally. The Philly Fed Manufacturing Index dropped unexpectedly for the first time this year, falling to - (minus) 7.7 against forecasts for + 7.1. Risk was sold heavily on the news and the USD strengthened as a result. GBP/USD fell back below 1.5600 yesterday afternoon and opens close to its 24 hour lows at 1.5550 this morning. There is no data due today, but as you might have guessed it doesn't necessarily mean that it will be a quiet day.

- We expect a range today in the GBP/USD rate of 1.5590 to 1.5610

:: Euro: EUR/USD is just managing to find support at 1.2800 this morning, as it has just about done overnight. It has remained under pressure following a German news article the previous night suggesting that cuts in Greece are impacting negatively on the local economy which could potentially lead to further debt problems. US manufacturing data released yesterday afternoon also dealt a blow to the single currency as markets shunned risk and bought into the haven US dollar. EUR/USD opens this morning at 1.2820 ahead of a very light economic data day. On the crosses, the Euro fell back against GBP yesterday morning as UK retail sales lifted the pound. GBP/EUR traded to a high of 1.2200 but has since drifted back to open todays session at 1.2125.

- We expect a range today in the GBP/EUR rate of 1.2100 to 1.2180

:: Aussie and Kiwi Dollars: AUD/USD and NZD/USD have also declined, owing in part to poor US data released yesterday and the subsequent sell off in risk. Uncertainty over the upcoming Australian election results is also weighing heavy on the Aussie dollar which currently trades at .8895 down from .9015 where it traded this time yesterday. Both AUD and NZD, as high yielding commodity currencies continue to be positively correlated with global risk demand. NZD/USD has fallen from .7130 to .7040 in the last 24 hours. Both GBP/AUD and GBP/NZD are higher as a result of weakness in the antipodean currencies and open this morning at 1.7460 and 2.2060 respectively.

- We expect a range today in the GBP/AUD rate of 1.7360 to 1.7540

- We expect a range today in the GBP/NZD rate of 2.1940 to 2.2120

:: Data Releases:

AUD: No data due for release today
EUR: No data due for release today
GBP: No data due for release today
NZD: No data due for release today
USD: No data due for release today

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Daily Forex Commentary - Thursday, 19 Aug 2010

Thu, 19 Aug 2010 08:27:34:013 GMT

:: United States Dollar: The Pound got a lift yesterday from the results of the MPC minutes. As expected the vote turned out to be 8-1 in favour of leaving the base rate on hold at 0.5% with Andrew Sentance again being the only member in favour of a rate hike. The minutes also showed that the committee had discussed arguments in favour of a potential rate rise and the possibility of quantitative easing, although in the end deciding to leave both on hold. The markets interpreted this consideration by the MPC as mildly hawkish and GBP/USD pushed from 1.5520 to a high of 1.5680 on the news. The US dollar has since strengthened overnight however and GBP/USD has settled back to open the morning session at 1.5525. Investors now await the release of UK retail sales figures and the US Philly Fed Manufacturing Index later this afternoon.

- We expect a range today in the GBP/USD rate of 1.5440 to 1.5640

:: Euro: EUR/USD also enjoyed a brief rally yesterday morning rising from 1.2840 to 1.2915. Like GBP/USD and owing to a stronger USD through Asia EUR/USD has slipped back again and opens this morning at 1.2770. This has come despite a solid performance by Chinese and Japanese stocks overnight. It seems investors have been keen to take profit and see anything over 1.2900 as a good opportunity to do so. There is no data of note due from Europe today so we may see EUR/USD consolidate for the next 24 hours. GBP/EUR meanwhile managed to get back through 1.2100 yesterday and it has so far proven to be a convincing move. It trades at 1.2135 currently.

- We expect a range today in the GBP/EUR rate of 1.2080 to 1.2180

:: Aussie and Kiwi Dollars: The Aussie dollar has fallen in the last 24 hours as traders get a little jittery ahead of national elections this weekend. The mining tax issue has been brought back into focus as a result. There is a chance that the Green party could hold the balance of power after the weekend, a party that is in favour of a mining super profits tax. AUD/USD has fallen from .9040 in the last 12 hours and opens this morning at .8970. NZD/USD has also fallen overnight, this partly as result of figures showing that NZ producer prices rose last month. GBP/AUD and GBP/NZD have both been fairly steady against a backdrop of USD strength in the last 24 hours. They open at 1.7290 and 2.1785 respectively.

- We expect a range today in the GBP/AUD rate of 1.7210 to 1.7390

- We expect a range today in the GBP/NZD rate of 2.1700 to 2.1900

:: Data Releases:

AUD: No data due for release today
EUR: German PPI
GBP: Retail Sales, Mortgage Approvals, Money Supply, CBI Industrial Order Expectations
NZD: Credit Card Spending
USD: Unemployment Claims, Phily Fed Manufacturing Index

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Daily Forex Commentary - Wednesday, 18 Aug 2010

Wed, 18 Aug 2010 08:19:28:390 GMT

:: United States Dollar: GBP/USD fell back again yesterday after trading to a high of 1.5680 on Monday. It has so far found support at 1.5500 and opens the morning at 1.5530. The steady decline comes partly as a result of UK CPI inflation data released yesterday. This showed that inflation rose by less than expected at 3.1% in July but it was enough still to force the Bank of England Governor to write another letter to the Chancellor of the Exchequer explaining how the central bank intends to deal with the issue. Markets are conscious that this release may create a divide among MPC members, those on the side of Andrew Sentance who may vote for an interest rate rise and those that want to see other stimulus measures taken. The Bank of England MPC minutes are due this morning and traders remain cautious in the run up to the result.

- We expect a range today in the GBP/USD rate of 1.5500 to 1.5640

:: Euro: It has been a bumpy ride for EUR/USD over the last 24 hours. As mentioned in yesterday''s commentary the Euro was well bid in advance of what markets thought would be a strong German ZEW release. It turned out not to be so and despite a good set of GDP data last week from Germany, the figures showed that investor confidence had slumped to a 16 month low in August. EUR/USD fell back to 1.2840 on the news. The single currency was however buoyed by news that demand for Irish bonds was strong yesterday, an example of which markets hope to see replicated in other parts of Europe. Despite this risk remains off, this following a bout of risk selling through the Asian session. EUR/USD opens this morning at 1.2450. GBP/EUR has fallen in line with GBP/USD. It slipped below the 1.2100 figure yesterday afternoon and sits at 1.2080 this morning.

- We expect a range today in the GBP/EUR rate of 1.2060 to 1.2140

:: Aussie and Kiwi Dollars: It has been a fairly quiet ride for both AUD/USD and NZD/USD in the last few sessions. AUD/USD pushed to a high of .9070 yesterday afternoon and NZD/USD was dragged higher too to .7145. Data released overnight from Australia, by way of wage price index was much as expected and failed to have an impact on the local unit. It opens up this morning at .9000, lower as a result of weaker Asian stock prices and risk aversion. NZD/USD has also drifted from .7145 and trades at .7110 currently. GBP/AUD fell from 1.7380 yesterday morning to a low of 1.7160 in line with the temporary rise in AUD/USD and decline in Cable. GBP/NZD has tracked this cross, having fallen from 2.2070 to 2.1800. It remains on the back foot this morning and sits at 2.1805. GBP/AUD trades at 1.7245.

- We expect a range today in the GBP/AUD rate of 1.7160 to 1.7340

- We expect a range today in the GBP/NZD rate of 2.1760 to 2.1920

:: Data Releases:

AUD: No data due for release today
EUR: No data due for release today
GBP: MPC Meeting Minutes
NZD: PPI Input and Output
USD: Crude Oil Inventories

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Daily Forex Commentary - Tuesday, 17 Aug 2010

Tue, 17 Aug 2010 08:14:58:490 GMT

:: United States Dollar: The pound recovered against the US dollar yesterday, this after falling close to the 1.5500 figure early on Monday morning. The USD is a touch weaker across the board this morning. It has fallen in response to reports stating that Chinese demand for European bonds has increased and according to TICS data sales of USD denominated securities by China remain high, this being further evidence that China (now the world''s second largest economy) is diversifying away from the greenback. Meanwhile the US Empire State Manufacturing Index came in weaker than expected yesterday which also undermined the US dollar. Risk aversion remains heightened however and markets continue to deliberate over the possibility of another (double-dip) global recession. This could favour the USD near term. Even nearer term focus this morning will be on UK CPI inflation figures.

- We expect a range today in the GBP/USD rate of 1.5540 to 1.5690

:: Euro: EUR/USD has also recovered and opens this morning at 1.2875. This comes following reports in the last 24 hours that China continues to diversify away from USD denominated assets. There is also a rumour doing the rounds this morning that German ZEW (due for release this morning) will be strong which is keeping the single currency well bid for now. The Euro advanced yesterday too despite a report from the Bank of Portugal confirming that it had borrowed 21% more from the central bank in July than it did in June, a sure sign that the Eurozone is far from achieving financial stability. It is for these kinds of reasons that markets remain highly risk averse. GBP/EUR remains fairly quiet this morning and after attempting to push higher through the 1.2200 figure yesterday it opens at 1.2165.

- We expect a range today in the GBP/EUR rate of 1.2100 to 1.2210

:: Aussie and Kiwi Dollars: The Aussie and Kiwi are also a touch higher this morning and open at .9015 and .7110 respectively. The RBA minutes came and went and had little impact on the AUD. No surprises and there is no reason for markets to be concerned about any imminent rate hike it seems. Both currencies have strengthened on the back of a weaker US dollar. GBP/AUD and GBP/NZD are steady, if a touch weaker this morning and trade at 1.7340 and 2.1990.

- We expect a range today in the GBP/AUD rate of 1.7270 to 1.7420

- We expect a range today in the GBP/NZD rate of 2.1920 to 2.2180

:: Data Releases:

AUD: Wage Price Index
EUR: Current Account, German ZEW Economic Sentiment
GBP: CPI
NZD: No data due for release today
USD: Building Permits, PPI, Housing Starts, Industrial Production

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Daily Forex Commentary - Monday, 16 Aug 2010

Mon, 16 Aug 2010 08:35:01:697 GMT

:: United States Dollar: Markets open this morning in 'risk off mode. This follows weak risk sentiment on Friday after US retails sales data came in mildly below market expectations. Weak Japanese GDP data has been released overnight too which has spurred another bout of risk selling throughout the Asian session. The Japanese Nikkei ended up falling 0.6%. It meant that GBP/USD fell overnight, as did most other currencies against the US dollar, to a low of 1.5538. This is in stark contrast to the end of the previous week when GBP/USD was threatening a break of 1.6000. It comes following a week of generally negative reports and data, including UK house price data last Monday and the BoE inflation report last Wednesday. GBP/USD has recovered slightly from its overnight lows and trades at 1.5620 this morning. US Empire State Manufacturing Index and TIC Flows are due today whilst UK CPI inflation data, BoE MPC Minutes and retail sales are due on Tuesday, Wednesday and Thursday respectively.

- We expect a range today in the GBP/USD rate of 1.5500 to 1.5640

:: Euro: As global markets shunned risk on Friday and overnight EUR/USD continued to drift lower. It hit a low of 1.2735 overnight. This has come despite a strong German and Euro zone GDP reading on Friday. German GDP expanded at its quickest in 20 years, growing 2.2% in the second quarter. This in turn helped European GDP grow by 1% in the second quarter, the fastest in 4 years. It is strange how such a strong reading was shunned by markets, who are seemingly more concerned with risk, of which started to get sold following the FOMC decision and statement last week. EUR/USD opens this morning at 1.2800, having recovered slightly on the back of some profit taking so far this morning. Between EUR and GBP, EUR has been the biggest loser. GBP/EUR came close to breaking through 1.2200 on Friday and still looks firm this morning at 1.2170.

- We expect a range today in the GBP/EUR rate of 1.2100 to 1.2200

:: Aussie and Kiwi Dollars: Both AUD/USD and NZD/USD have lost further ground overnight as traders in Asia sell commodity currencies amid a cloud of risk aversion. The sell off has been exasperated by the release of weak Japanese GDP figures released overnight. Local Australian shares lost ground for the 4th day in a row and despite a rise on the NZ stock market AUD/USD and NZD/USD fell to respective lows of .8860 and .7010. Australian Monetary Policy Minutes are due later on tonight and may give AUD/USD further direction, although perhaps not a positive sense of direction following NABs prediction that ADU/USD will fall to .8600 by the end of September. GBP/AUD and GBP/NZD have steadily risen following the sell off in commodity currencies and open this morning at 1.7480 and 2.2175 respectively.

- We expect a range today in the GBP/AUD rate of 1.7380 to 1.7560

- We expect a range today in the GBP/NZD rate of 2.2090 to 2.2240

:: Data Releases:

AUD: Monetray Policy Meeting Minutes
EUR: CPI
GBP: No data due for release today
NZD: No data due for release today
USD: Empire State Manufacturing Index, TIC Long-Term Purchases, NAHB Housing Market Index

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Daily Forex Commentary - Friday, 13 Aug 2010

Fri, 13 Aug 2010 08:44:34:503 GMT

:: United States Dollar: Investors continued to pile into safe haven currencies yesterday, benefitting the dollar and US treasuries. Negative US data flows are having a positive effect on the world’s reserve currency, as a change in risk sentiment (and an increase in uncertainty) normally results in a flock to safe haven assets. Despite worse than expected unemployment figures from the States the dollar trudged higher against a basket of currencies. In the UK fears about a growth in the number of house repossessions is putting downward pressure on mortgage backed securities, which could ultimately filter through and affect banks willingness to lend. The government is currently in the process of reducing support for mortgage interest, cutting the rate of support by 2.33% (a cut of around £200 per month on a £150,000 mortgage). This is likely to weigh on outlook in the medium term. GBP/USD fell from 1.5710 levels down to 1.5560. We open higher this morning at 1.5650. Today we have inflationary data out from the US in the form of CPI, with FOMC Member Hoenig speaking at 16:30.

- We expect a range today in the GBP/USD rate of 1.5560 to 1.5760

:: Euro: German GDP figures came in much better than expected this morning, at an astonishing 2.2% growth rate for the second quarter. Economists had been expecting a sharp increase in growth with most estimating a 1.3% increase. The sharp rise was driven by an increase in exports, reflecting an improvement in the pace of the global recovery. However, some are quick to note that this may not continue, and further gains of this nature would be rare. Despite the good news from Germany the Euro is suffering at the moment as a result of worries elsewhere in the single-currency economic union. These figures highlight the growing disparity between Northern and Southern EU economies, and show how the drop in the Euro is benefitting some countries but not others. EUR/USD fell from 1.2930 levels yesterday to a low of 1.2780. We open at 1.2850 this morning.

- We expect a range today in the GBP/EUR rate of 1.2100 to 1.2240

:: Aussie and Kiwi Dollars: The Aussie managed to hold ground yesterday, despite a continuation of investors selling risky currencies in favour of safe haven assets. A couple of positive news flows from corporate lifted sentiment and supported stocks which favoured the Australian dollar. AUD/USD dropped early in the day to levels around 0.8920, but recovered to levels close to 0.9040 overnight. We open this morning at 0.9000. In New Zealand consumer spending data came in much higher than expected, fuelling expectations that the RBNZ will raise rates at their next meeting in an attempt to cool price growth. Retail sales came in at 0.9% vs an expectation of a 0.5%. NZD/USD fell to 0.7070 in the run up to the release, but rallied sharply to 0.7180 throughout the Asian trading session. We open lower at 0.7130 this morning.

- We expect a range today in the GBP/AUD rate of 1.7270 to 1.7480

- We expect a range today in the GBP/NZD rate of 2.1850 to 2.2070

:: Data Releases:

AUD: No data of note
EUR: No data of note
GBP: No data of note
NZD: No data of note
USD: CPI / Retail Sales / FOMC''s Hoenig Speaks

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Daily Forex Commentary - Thursday, 12 Aug 2010

Thu, 12 Aug 2010 08:28:17:323 GMT

:: United States Dollar: The dollar continued to strengthen yesterday on the back of a series of worse than expected news flows from around the globe. Investors took fright and headed to the safety of gilts, long dated treasuries and ultimately the dollar. Figures from the US showing the largest trade deficit in 21 months did little to help global sentiment, and coupled with earlier news that import figures from China were worse than expected the markets dived as risk aversion came back with a vengeance. In the UK, the Bank of England’s quarterly inflation report highlighted revisions to growth expectations, and contained forecasts pertaining to future inflationary expectations. During the press conference after the release BoE Governor Mervyn King stated that inflation is likely to remain high during the rest of 2010 and throughout 2011. Whilst the BoE’s current inflation target is 2%, King alluded to price growth remaining well above this, and possibly above 3%, leading to letters to the Chancellor to explain why. Price volatility remains one of the biggest causes of sustained inflation, and with the introduction of the 20% VAT rate in the UK real interest rates are likely to remain negative for a good time to come (real interest rates are effectively the rate you get on your savings minus the effects of inflation). GBP/USD sold off aggressively, from a morning high of 1.5860 to a low of 1.5614 last night. We open slightly higher this morning at 1.5700 levels. No data of note out of the UK, but we have import prices and some unemployment data out from the US which may drive volatility.

- We expect a range today in the GBP/USD rate of 1.5660 to 1.5790

:: Euro: The Euro suffered from the fresh round of risk unwinding, with news from Ireland doing little to tempt investors to stay long of European assets. After months of silence from the ECB regarding bail outs, there has been talk that they are preparing to intervene to prop up Irish debt, amid concerns that the escalating costs of Ireland’s rescue of Anglo Irish Bank (AIB) are affecting the country’s ability to service its own government debt. Spreads on 10yr Irish government bonds rose to 297 basis points above German Bunds (which means Ireland have to pay around 5.5% to borrow in the 10yr region). At these costs it will be difficult for Ireland to be able to roll over and debt that they may have maturing, and as they are currently deep into many of their deficit cutting austerity measures it is unlikely that tax revenues will be able to pick up slack and reduce the need to borrow. The question remains that if the ECB are prepared to step in to prop up Irish debt, to what extent will they offer the same insurance to other EU countries, and what will such action cost? Trade deficit worries in the US, growth slowdown in the UK and Chinese import data proved to be too much for investors and the Euro dived by over 3% from a high of 1.3230 on Tuesday evening, to a low of 1.2830 overnight. Little in the way of data today, but we have German GDP figures out early tomorrow.

- We expect a range today in the GBP/EUR rate of 1.2090 to 1.2195

:: Aussie and Kiwi Dollars: Risk aversion did little to help the Aussie and the Kiwi, which both suffered as a result of the dash to safe haven assets. Despite positive corporate news from Quantas in the form of better than expected outlook for the company, and positive outlook for the grain farming sector (because of global wheat shortages), the Aussie fell from 0.9130 down to a low of 0.8920 in the early hours of this morning. We open slightly higher at 0.8980 levels. In New Zealand, a recent report compiled by Infometrics points to house prices slowing by over 4% in the year to June 2011, partly reflecting tightened lending conditions and partly due to prospective buyers holding off because of economic uncertainty. NZD/USD dropped from 0.7230 to 0.7095. We open this morning at 0.7135.

- We expect a range today in the GBP/AUD rate of 1.7340 to 1.7590

- We expect a range today in the GBP/NZD rate of 2.1850 to 2.2070

:: Data Releases:

AUD: No data of note
EUR: German GDP figures (07:00 GMT on Friday)
GBP: No data of note
NZD: Retail Sales
USD: Import Prices / Unemployment Claims

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Daily Forex Commentary - Wednesday, 11 Aug 2010

Wed, 11 Aug 2010 08:36:40:437 GMT

:: United States Dollar: All eyes were on the statement and press conference given by the FOMC last night. Chairman Ben Bernanke reiterated the committee’s stance on ultra low rates for an extended period, but the highlight wasn’t in the content regarding the Fed Funds rate. FOMC members have agreed that due to a recent string of bad data that they will continue purchases of US assets to support the economy. This time the Fed will focus purchases on treasuries rather than mortgage backed securities (MBS) which they’ve been purchasing up to the present day. The program, being dubbed “QE-Lite”, won’t inject any new money into the economy; rather it will reinvest funds from maturing MBS’s that would have been withdrawn. Whilst many were expecting such a move, the amounts being reinvested are a drop in the ocean compared to previous levels of stimulus. The move is being viewed as a token gesture, and a reversal of exit plans, rather than an all effort to inject more cash and support growth. The last thing the Fed want to be doing is pushing through requests for permission to print more cash. Clearly their wait-and-see approach is designed to allow for more data and a clearer picture on where the economy is heading in the near future. GBP/USD rallied sharply on the news from 1.5780 up to levels beyond 1.5900 very briefly. We open lower this morning at 1.5800 levels. We have BoE Quarterly Inflation Report out at 10:30 this morning which could drive short term volatility.

- We expect a range today in the GBP/USD rate of 1.5680 to 1.5880

:: Euro: The Euro benefitted briefly from the FOMC statement regarding QE last night, but any gains, as was the case with the Pound, were quickly reversed as the realization kicked in that if the US is having trouble with their economy after such huge stimulus, to what extent will this affect the Eurozone. The ECB which has so far only dipped its toes into QE programs may have to look into similar stimulus methods to prop up ailing EU economies. The Euro had some positive news yesterday in the way of corporate results from ING Bank, which beat estimates on its second quarter profits. Net income rose to 1.09 billion Euros versus an expectation of an increase of 682 million. Whilst this news is positive in the short term the bank also noted that its tier one capital, a key measure of ability to absorb losses, rose to 8.6%, reflecting a lower level of lending to businesses and individuals. EUR/USD rose to 1.3228 immediately after the FOMC decision, but sold off to levels around 1.3100. We open lower this morning at 1.3060.

- We expect a range today in the GBP/EUR rate of 1.2000 to 1.2140

:: Aussie and Kiwi Dollars: Heightened risk aversion isn’t helping the Aussie or the Kiwi in the short term, and in the last couple of days we’ve seen a continuation of safe haven buying, pushing the Aussie lower. As was the case with most currency pairs the Aussie rallied immediately after the FOMC decision, but quickly gave back gains as investors unwound long positions in favour of the safety of currencies like the US dollar, Swiss franc and Japanese Yen. AUD/USD peaked at levels just above 0.9160 before retreating to lower levels quite quickly. We open at 0.9040 this morning. NZD/USD suffered the same fate and dropped to 0.7180 levels were there is support on a technical basis.

- We expect a range today in the GBP/AUD rate of 1.7340 to 1.7520

- We expect a range today in the GBP/NZD rate of 2.1800 to 2.2020

:: Data Releases:

AUD: MI Inflation Expectations / Employment Change
EUR: No data of note
GBP: Quarterly Inflation Report / BoE King Speaks
NZD: Business NZ Manufacturing Index / FPI change
USD: Fed Budget Balance / Crude Oil Inventories

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Daily Forex Commentary - Tuesday, 10 Aug 2010

Tue, 10 Aug 2010 08:36:06:783 GMT

:: United States Dollar: The dollar strengthened throughout the course of trading yesterday, increasing in pace in the Asian session. Speculation that the Federal Reserve will announce an increase in quantitative easing in a statement tonight (19:15 GMT) has increased demand for safe haven products. US treasuries benefitted from this, rallying on the back of a shift from risky assets and speculation that QE purchases will be focused on government treasuries rather than mortgage backed securities (MBS) the Fed has previously purchased. Many analysts will be looking to see if it will be an increase in spending, or merely an extension of the scheme. Current MBS’s that are expiring will free up some cash for the Fed to reinvest in other products, so this wouldn’t be “new” money entering the system. GBP/USD fell from a high of 1.5995 at the beginning of yesterday to a low of 1.5775 in the early hours of this morning. RICS house price balance figures did little to help the Pound, coming in much worse than expected at -8% (versus an expectation of an increase of 5%). The house price balance is a diffusion index based on surveyors in a number of areas. Clearly this is a short term blow, and whilst most economists were expecting a slowdown, these figures show the possible severity with which the housing market can fall. Today we have trade balance figures out of the UK, and some employment / productivity data out of the US which may drive volatility in the short term.

- We expect a range today in the GBP/USD rate of 1.5720 to 1.5880

:: Euro: The Euro also suffered from the flight to safety, and speculation that the Fed may increase QE. EUR/USD fell from a high of 1.3308 at the beginning of yesterday, to 1.3135 this morning. Whilst the move was not driven by factors in the EU, global risk sentiment has pushed up risk premiums. The cost of protecting European corporate bonds rallied on the back of an increase in uncertainty. Credit default swaps (CDS), a form of insurance, are issued to investors looking to protect themselves against adverse credit events, such as a default or a downgrade. The use of CDS’s has been blamed for bubbles in bond markets, and some countries even sought to ban their use. Despite their notoriety they are a useful indicator of risk sentiment. The Markit iTraxx Crossover Index showed the cost of insuring high yield bonds increased to 472 basis points (or 472,000 Euro’s for every 10million worth of bonds purchased). This cost will deter potential buyers of EU bonds and drive their price down further. These factors are likely to weigh on the Euro quite substantially in the short to medium term.

- We expect a range today in the GBP/EUR rate of 1.1940 to 1.2050

:: Aussie and Kiwi Dollars: The exodus from risky assets did little for the Aussie and the Kiwi, which both sold off throughout the day yesterday, and during the overnight session. In New Zealand a rise in job advertisements did little to lift sentiment towards all things NZ, which are at the mercy of volatility in the markets. The Seek employment index shows the number of job ad’s increasing by 5.2% in July. News that Chinese imports had slowed did little to help the Aussie which dropped from 0.9205 to a low of 0.9105 in the early hours of this morning. China’s trade surplus grew by 28.7 billion US dollars in July, beating expectations of a 19.6 billion increase. Imports rose by only 22.7% vs an expectation of 34.1%, fuelling fears that China is once again turning on the machines to provide cheap goods to the world rather than increasing domestic demand. These issues will weigh on the Aussie in the medium to long term, and all eyes will be on any future data from China.

- We expect a range today in the GBP/AUD rate of 1.7200 to 1.7420

- We expect a range today in the GBP/NZD rate of 2.1720 to 2.1980

:: Data Releases:

AUD: Westpac Consumer Sentiment
EUR: No data of note
GBP: Trade Balance Figures
NZD: No data of note
USD: FOMC Statement / Fed Funds Rate

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Daily Forex Commentary - Monday, 09 Aug 2010

Mon, 09 Aug 2010 07:52:43:737 GMT

:: United States Dollar: The dollar took a pummeling towards the end of last week on the back of worse than expected unemployment data, reigniting fears that the Federal Reserve will have to act to prevent further declines in economic growth. Non-farm payrolls (the change in the number of people employed in non-seasonal farming work) dropped by an unexpected 131,000 vs an expectation of a drop of only 63,000. The bulk of the change came from a fall in temporary government workers, but this data won’t help sentiment in the short term. Talk of an “extension” of quantitative easing is already happening, but should the fundamentals get even worse, it is the extent to which QE happens that most will be watching. The dollar sold off against a basket of currencies, with GBP/USD trading as high as 1.5998 from a daily low of 1.5840. In the UK many are bracing themselves for a grim Quarterly Inflation Report from the Bank of England on Wednesday this week. Despite stronger than expected second quarter growth analysts are expecting the BoE to revise down growth expectations and to factor in inflationary pressures such as the planned hike in VAT from January 2011. There is very little in the way of data out today and as such markets should be relatively calmer.

- We expect a range today in the GBP/USD rate of 1.5860 to 1.6040

:: Euro: Figures out this morning show that the power house of Europe continues to grow its trade surplus, which is now a whopping 14.1 billion Euros. We are of course talking about Germany, whose exports rose by far more than analysts had expected. Export figures from June were revised to show a 7.9% increase in sales abroad. Interestingly, sales to countries outside the EU rose by 37%, showing demand picking up in areas like China and the Middle East. These figures will no doubt draw attention to the growing difference in competitiveness between Germany and southern EU states that are struggling to raise financing. The Euro has benefitted from such positive short term data, and took strength from poor US figures released last week. EUR/USD traded up from a low of 1.3157 to a high of 1.3334 on Friday. We open slightly lower at 1.3290 levels this morning.

- We expect a range today in the GBP/EUR rate of 1.1940 to 1.2050

:: Aussie and Kiwi Dollars: Both the Aussie and the Kiwi benefitted from negative US data last week, rallying sharply on the back of investors looking for yield. Despite worse than expected figures from Australia this morning the Aussie remains firm. Home loan data showed a 3.9% drop in mortgage approvals compared with the previous month. Many analysts were expecting a slight improvement, and this most recent data highlights the difficult lending conditions. AUD/USD pushed as high as 0.9220 on Friday, before selling off sharply to 0.9140. We open this morning at 0.9190 levels. In New Zealand the Kiwi also pushed higher, with NZD/USD rallying to a high of 0.7345 last week before selling off to levels around 0.7280. There has been little on the data front, but this week looks to be a tad more exciting with retail sales figures and manufacturing surveys, which will provide a little more insight into short term direction. We open at 0.7322 this morning.

- We expect a range today in the GBP/AUD rate of 1.7230 to 1.7480

- We expect a range today in the GBP/NZD rate of 2.1650 to 2.1890

:: Data Releases:

AUD: NAB Busines Confidence figures
EUR: No data of note
GBP: BRC Retail Sales / RICS House Prices
NZD: No data of note
USD: No data of note

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Daily Forex Commentary - Friday, 06 Aug 2010

Fri, 06 Aug 2010 08:56:03:197 GMT

:: United States Dollar: Sterling sits higher against the US Dollar from Thursdays start. It seems that Sterling fell early against the Greenback yesterday as it got caught up in rumours surrounding a Merger and Acquisition. The rumour weighed heavy on cable as it was thought that Shell was lining up to purchase Canadian oil and gas company Encana. These early losses taking the currency pair as low as 1.5820 were reversed as the session went on. BoE left interest rates at current level and QE was unchanged - no shocks there. US data is what has supported the majority of gains for cable overnight. US Jobless claims rose 19,000 to 479,000 to cast a dark cloud over the pending Employment data today and once again, the double dip recession is on everyone’s lips. GBP/USD opens this morning at 1.5901, with all eyes on the US employment data today.

1.5820 to 1.5960

:: Euro: The single currency also suffered against the US Dollar early yesterday. This was also down to the M&A rumour mentioned above. Euro fell as low as 1.3120 against the US Dollar on the back of this. As the session went on, better than expected German manufacturing data as well as news that Greece has made substantial progress in its start to restoring soundness to its financial situation both dragged the single currency higher. US less than positive data also supporting Euros gains and the pair reached a Thursday high of 1.3230. A quiet Asian session has seen Euro decline from this high and opens under the big figure 1.3200 at 1.3189 currently. Little in the way of movement for the Pound and the Euro was seen yesterday, ranging within 50 pips. Today’s start sees GBP/EUR open at 1.2053.

- We expect a range today in the GBP/EUR rate of 1.1990 to 1.2080

:: Aussie and Kiwi Dollars: The AUD advances on the US Dollar as the NZD reverses Wednesday’s losses. The antipodean currencies fell briefly during yesterday’s session on news that Chinese regulators were to call for extended stress tests, but these losses were temporary as they soon rebounded after a positive RBA monetary policy statement. It showed an upbeat outlook on GDP, inflation and jobs. This has taken AUD/USD closer to 0.9200 overnight, but opens this morning at 0.9160. NZD/USD had broken back through 0.7300, but opens a little lower this morning at 0.7277. Sterling has declined against both the Aussie and the Kiwi. GBP/AUD opens at 1.7324 and GBP/NZD begins the day at 2.1795.

- We expect a range today in the GBP/AUD rate of 1.7250 to 1.7410

- We expect a range today in the GBP/NZD rate of 2.1690 to 2.1880

:: Data Releases:

AUD: No data due for release today
EUR: ECB President Trichet Speaks, German Industrial Production m/m
GBP: Manufacturing Production m/m, PPI Input m/m, NIESR GDP Estimate
NZD: No data due for release today
USD: Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings m/m

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Daily Forex Commentary - Thursday, 05 Aug 2010

Thu, 05 Aug 2010 08:43:25:073 GMT

:: United States Dollar: Sterling has fallen off from it''s recent highs against the US dollar. UK Halifax House prices data yesterday saw a rise of 0.6 % in July, reversing the fall seen in June. This data helping the Pound remain above the big figure 1.5900, but as the UK session went on, Cable gradually dipped. Firstly UK July services PMI index fell to bring the currency pair lower and then as we entered the US session Non-manufacturing ISM was released. Both ISM indexes coming in above expectation at 54.3 (services) and 55.4 (manufacturing) showing that there is no need for the FED to hit the panic button just yet. This has brought the currency pair back down to sit at 1.5847 currently. A big couple of days ahead for both sides of the Pond. UK interest rate decision today - will anyone join Sentance in the call for a hike, and US jobless claims. Tomorrow sees US Non-Farm Employment Change to round up what should make a interesting couple of days.

1.5790 to 1.5960

:: Euro: The single currency also sits lower against the Greenback. Poor Euro-zone PMI data seeing the first dip for the currency pair, dropping to 1.3184 before recovering. Euro-zone retail sales figures came in flat and not really having a play on movement. The US session is what sustainably brought EUR/USD lower as Non-manufacturing ISM data came in better than expected. The previous fears that were surrounding the US Dollar almost melted away. EUR/USD opens this morning at 1.3150. Sterling had a quiet session versus the Euro yesterday, trading within a 40 pip range. GBP/EUR opens marginally lower at 1.2051 this morning.

- We expect a range today in the GBP/EUR rate of 1.1980 to 1.2090

:: Aussie and Kiwi Dollars: The Aussie remains firm against the Greenback this morning, but the Kiwi has lost ground. The losses for the NZD followed the release of employment data. New Zealand’s jobless rate rose 6.8 % in the second quarter, far worse than what economists forecasted. NZD/USD dipped below 0.7300 and currently sits at 0.7258 - a 24 hour low. AUD/USD opens today’s session at 0.9137. Pound, on the basis of what has already been mentioned, has declined against the AUD, but has reversed its losses against the NZD. GBP/AUD drops to and is currently at 1.7325. GBP/NZD which had fallen to 2.1600 before the NZ employment data, now sits back up at 2.1807 for today’s start.

- We expect a range today in the GBP/AUD rate of 1.7240 to 1.7460

- We expect a range today in the GBP/NZD rate of 2.1640 to 2.1880

:: Data Releases:

AUD: AIG Construction Index, RBA Monetray Policy Statement
EUR: German Factory Orders m/m, Minimum Bid Rate, ECB Press Conference
GBP: Asset Purchase Facility, MPC Rate Statement, Official Bank Rate
NZD: No data due for release today
USD: Unemployment Claims, Treasury Secretary Geithner Speaks

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Daily Forex Commentary - Wednesday, 04 Aug 2010

Wed, 04 Aug 2010 08:38:49:647 GMT

:: United States Dollar: Cable traded within a 60 pip range yesterday. The UK has seen upbeat manufacturing sector data and robust bank earnings of recent and this has helped the Pound to new 6 month highs against the US Dollar. Sterling peaked at 1.5968 yesterday. The recent poor data in the US not helping the Greenbacks cause. This continued yesterday also on speculation that the US may resort to pumping money into the economy to maintain growth, adopting the so-called quantitative easing already done in the UK. This would see the US Dollar as a less attractive currency in which to invest and likely lose further ground. Despite Tuesday’s less than positive UK construction data, Sterling remains above 1.5900 and opens this morning at 1.5930 versus the US Dollar.

1.5840 to 1.5970

:: Euro: The Euro maintains its recent positive movement against the Greenback. The recent poor data in the US and speculation also surrounding the US pumping money into the economy has seen the Greenback fall across the board. It has also seen investors move away from the safe haven currency. The single currency has reached new highs against the US Dollar on the back of this and peaked yesterday at 1.3260. The currency pair opens this morning just under 1.3200 at 1.3192 currently. Sterling is pushing higher against the Euro this morning. This has been down to further positive UK data this morning with Halifax HPI m/m rising the most in four months. GBP/EUR currently sits at 1.2079.

- We expect a range today in the GBP/EUR rate of 1.1980 to 1.2130

:: Aussie and Kiwi Dollars: The antipodean currencies reverse early losses against the Greenback for the start of today session. The falling Nikkei was the main reason for the fall in the Aussie as AUD/JPY selling was seen. These losses have been turned around during the Asian session as Australian June trade surplus widens on coal exports. This dragged the AUD from its slump below 0.9100 back up to an overnight high of 0.9145. The currency pair opens at 0.9122. NZD/USD had a choppy session yesterday and opens this morning at 0.7315, not far from yesterdays start. Sterling keeps its recent gains against the Aussie and Kiwi despite a topsey turvey day. GBP/AUD is currently at 1.7457 and GBP/NZD 2.1775. Again, not far from yesterdays start.

- We expect a range today in the GBP/AUD rate of 1.7360 to 1.7540

- We expect a range today in the GBP/NZD rate of 2.1660 to 2.1860

:: Data Releases:

AUD: No data due for release today
EUR: Final Services PMI, Retail Sales m/m
GBP: Halifax HPI m/m, Services PMI
NZD: Employment Change q/q, Unemployment Rate
USD: Challenger Job Cuts y/y, ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, Crude Oil Inventories

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Daily Forex Commentary - Tuesday, 03 Aug 2010

Tue, 03 Aug 2010 08:46:02:530 GMT

:: United States Dollar: Sterling surges to a six-month high against the US Dollar. Pounds positive move upwards saw it break 1.5900 versus the Greenback yesterday and these gains have maintained overnight. One main contributor to the Pound picking up came as HSBC reported a 121 % pre-tax profit rise to £ 6.98 bn for the first 6 months of this year. This provided evidence of a healthy banking sector, which is a key contributor to the UK economy. Another contributor came as UK manufacturing data showed expansion for the tenth straight month. This has fuelled further optimism that the UK's recession recovery is faster than what economists had first expected. On the other side of the pond we have seen further comments from the FEDs Bernanke that again reiterates the US economy has a way to go before a full recovery from the recession. Those two words popping up again - Double dip. Cable was a lot quieter during the Asian session and this morning opens at 1.5950.

1.5780 to 1.5960

:: Euro: The single currency breaks the mould against the Greenback. The range bound currency pair broke its recent ranges yesterday, but only after what was a very quiet European session. It was only the latter ends of the European session / start of the US session that movement began and the Euro started to perform pushing above 1.3100 against the Greenback. Date in Europe saw Euro-zone manufacturing PMI rise to 56.7 from flash 56.5 and banking profits helping the European stocks rise also, but on a day where most currencies gained against the USD the Euro wasn’t going to be any different. EUR/USD opens high at 1.3234. Sterling sitting a little lower this morning from yesterday’s highs. The pair broke 1.2100 early yesterday, but the Euro has fought back overnight and puts GBP/EUR back down at 1.2055 for this morning.

- We expect a range today in the GBP/EUR rate of 1.1960 to 1.2120

:: Aussie and Kiwi Dollars: The AUD and NZD remain high against the US Dollar. The recent impressive gains for the antipodean currencies have maintained for today’s start despite poor Australian building approvals and retail sales data. A 40 pip dip was seen for AUD/USD on the back of these releases taking the pair from 0.9130 down to 0.9090. Shortly ago we have also seen the RBA announce that Australia will keep interest rates at 4.5 %. The Aussie has remained strong though and opens at 0.9110 versus the Greenback. NZD/USD opens at 0.7331 after a choppy Monday session. Sterling has advanced against the Aussie and Kiwi overnight. Australian less than positive data helping the Pounds gains and we see GBP/AUD open at 1.7480 and GBP/NZD 2.1715.

- We expect a range today in the GBP/AUD rate of 1.7340 to 1.7560

- We expect a range today in the GBP/NZD rate of 2.1590 to 2.1810

:: Data Releases:

AUD: Cash Rate, RBA Rate Statement, Commodity Prices y/y, AIG Services Index, Trade Balance, HPI q/q
EUR: PPI m/m
GBP: Construction PMI, Nationwide Consumer Confidence, BRC Shop Price Index y/y
NZD: No data due for release today
USD: Core PCE Price Index m/m, Personal Spending and Income m/m, Pending Home Sales m/m, Factory Orders m/m, Total Vehicle Sales

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Daily Forex Commentary - Monday, 02 Aug 2010

Mon, 02 Aug 2010 08:50:40:900 GMT

:: United States Dollar: Sterling begins the month strongly by pushing higher against the US Dollar. Sterling fell against the US Dollar during Friday’s session as risk aversion picked up. This saw the pair dip to a UK Session low of 1.5553 on, but month end demand for Cable saw the pair reside above 1.5700 as we entered, and for the duration of, the US session. Data in the US on Friday saw economic growth slow to 2.4 % and this along with unemployment remaining high state side, There is talk once again of a double dip recession. One notably being Alan Greenspan, former chairman of the US Federal Reserve, who believes a double dip recession "is possible". GBP/USD is currently riding high at 1.5785. Pound has been supported early this morning on news that UK''s manufacturing sector is performing better than expected.

- We expect a range today in the GBP/USD rate of 1.5690 to 1.5860

:: Euro: The Euro continues to remain range bound against the Greenback. Month end movement saw EUR/USD range between 1.2981 and 1.3093. Buy and Sell orders are the reason for the choppy session during European trade. News from Moodys that Spain may lose its AAA rating didnt help the Single currency and had its say on risk appetite. The US session saw Euro rise higher as data not exactly helping USD strength and we see EUR/USD open this month at 1.3070 - again within recent ranges. Sterling has risen higher against the Euro. Despite being under the big figure 1.2000 at the start of Friday last week, we now see the GBP/EUR above it and pushing to break 1.2100 currently.

- We expect a range today in the GBP/EUR rate of 1.1900 to 1.2160

:: Aussie and Kiwi Dollars: The Australian and New Zealand Dollars both have gained against the US Dollar. Despite data showing a marked slowdown in Chinas manufacturing activity, the Aussie rallied steadily through last night’s session. The Kiwi has mirrored the Aussies positive movement against the majors also. In a word, risk being the main reason for the appreciation and AUD/USD currently sits at 0.9120 with NZD/USD rising to open at 0.7327 this morning. Due to this we see Sterling a little lower from recent highs against the antipodean currencies. GBP/AUD begins August at 1.7313 and GBP/NZD 2.1535. Australian data overnight tonight likely to have a play on recent volatility.

- We expect a range today in the GBP/AUD rate of 1.7240 to 1.7430

- We expect a range today in the GBP/NZD rate of 2.1460 to 2.1690

:: Data Releases:

AUD: ANZ Job Advertisements m/m, Building Approvals m/m, Retail Sales m/m
EUR: Final Manufacturing PMI
GBP: Manufacturing PMI
NZD: Labour Cost Index q/q
USD: ISM Manufacturing PMI, Construction Spending m/m, ISM Manufacturing Prices, FED Chairman Bernanke Speaks, FOMC Member Geithner Speaks

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Daily Forex Commentary - Friday, 30 Jul 2010

Fri, 30 Jul 2010 07:57:27:330 GMT

:: United States Dollar: With little out on the data side of things volatility remained subdued yesterday and currencies traded within a tight range. In the US unemployment claims came in as expected at 457,000, a slight drop on the previous weekly reading of 468,000. Today may be a little better in terms of data releases which provide momentum as we have US GDP figures out at 13:30 GMT (expectation of a 1.1% increases Q on Q). In the UK a couple of positive news flows from the corporate sector drove positive sentiment higher in equities, supporting demand for the Pound. British Airways have commented that despite recent losses due to unforeseen events such as strike action and volcanic ash the business was gaining ground. HSBC, listed in London, also hinted at further investment abroad, saying it’s likely to drive business in Russia over the coming years. On the macro-economic side Nationwide house price data came in lower than expected, showing a fall in house prices of 0.5%. Credit constraint in the UK, whilst not serious at present, is likely to dampen demand and weigh on growth prospects in the medium to long term. GBP/USD traded as high as 1.5662 before selling off to levels around 1.5630 where we open this morning.

- We expect a range today in the GBP/USD rate of 1.5550 to 1.5680

:: Euro: The Euro seems to be hanging on for dear life at the moment and has passed this week relatively unscathed. Despite numerous press articles highlighting the immense funding costs of Southern European states the Euro hovered around the 1.3000 mark against the dollar and the 1.1950 mark against the Pound. To put funding costs in perspective, and to understand how mammoth the task ahead for countries like Spain, Greece and Ireland, these three countries alone must roll over (when debt expires) up to 337bn Euros worth of debt will need to be found. Currently this is being met by the ECB’s supportive measures, but these won’t last forever. Risks to the downside remain, and many are asking when, not if, it will happen. There’s not much in the way of data out from the EU today, but we have unemployment figures out at 10:00. EUR/USD traded up from 1.2980 to a high of 1.3106. We open at 1.3050 this morning.

- We expect a range today in the GBP/EUR rate of 1.1850 to 1.2100

:: Aussie and Kiwi Dollars: With volatility being low demand for the high yielders has rocketed, supporting both the Aussie and the Kiwi throughout this week. Despite these recent gains the usual stories are appearing in the press this morning, questioning where the high yielders will head in the coming months. Chinese manufacturing growth slowed for a third month, igniting fears that this may be a new trend in consumption, in a country that has been the driver of demand in the region for a number of years. Investors may be overlooking the short term impact of recent budgetary measures introduced by the Chinese government, which have subsequently been reversed (as a result of worse than expected growth figures). Home loan restrictions were introduced at the beginning of spring in an attempt to cool the housing market, but when officials saw figures dropping (which was the aim of the restrictions), lending was once again relaxed. Clearly this will impact the outlook for growth in the Antipodes, but at the moment the yield pick up is far too attractive (in a non-volatile market) for people to ignore. AUD/USD rallied from 0.8922 to 0.9042 before retreating to 0.8990 where we open. NZD/USD traded up to levels above 0.7280 but gave back gains and fell to 0.7210. .

- We expect a range today in the GBP/AUD rate of 1.7250 to 1.7500

- We expect a range today in the GBP/NZD rate of 2.1550 to 2.1800

:: Data Releases:

AUD: AIG Manufacturing (Monday) / MI Inflation Gauge (Monday)
EUR: Unemployment data
GBP: No data of note
NZD: ANZ Commodity Prices (Monday)
USD: Advance GDP Figures / Chicago PMI / Employment Cost Index
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Daily Forex Commentary - Thursday, 29 Jul 2010

Thu, 29 Jul 2010 08:51:16:537 GMT

:: United States Dollar: The Pound continued to rise against the Greenback yesterday. Cable saw an early rally Wednesday morning when stops tripped through 1.5600 taking the currency pair to a UK session high of 1.5626. BoE Miles and King made comments yesterday that dampened the recent positive sentiment surrounding the UK's economic recovery and this brought Pound temporarily lower against the Greenback, but a more positive view from Sentance dragged the Pound higher again. The US session once again had less than positive data with durable goods orders falling and the beige book showing that most districts continued recovery, but growth slowed in some areas. Shortly after the beige book, Governor Schwarzenegger declared a fiscal emergency in California - not good. Cable saw little movement overnight as it continuing to hover above 1.5600, but Nationwide UK house prices coming in worse than expected this morning keeps the Pound away from recent highs versus the US Dollar. GBP/USD opens at 1.5617.

- We expect a range today in the GBP/USD rate of 1.5530 to 1.5690

:: Euro: The single currency mirrors Pounds gains against the US Dollar. A choppy day for the currency pair saw the Euro dip above and below the big figure 1.3000. Resistance around 1.3040 / 1.3050 sees any positive gains to break these figures are followed by a shallow fall off. The range remains reasonably tight with the pair seeing lows around 1.2975 and highs of 1.3040. This range has been broken this morning though and EUR/USD opens this morning at 1.3060 - on the move upwards. It is the same old story with the Pound versus the Euro. Despite the odd jump or fall of around 30 pips the currency pair has traded around 1.2000 for the majority of yesterday’s session. Poor UK house prices data this morning sees the pair open at 1.1975.

- We expect a range today in the GBP/EUR rate of 1.1920 to 1.2060

:: Aussie and Kiwi Dollars: As the Aussie rises, the Kiwi falls against the US Dollar this morning. The Australian Dollar fell Tuesday after it was announced that growth unexpected slowed in the second quarter. The US sessions lack of positive data also hasn’t helped the currency pair and a fall closer to 0.8900 was seen. It seems that month end Aussie demand is helping the gains early this morning and AUD/USD currently sits back up at 0.9015. NZD/USD is another story and since interest rates were hiked 0.25 bps last night by the RBNZ the Kiwi has dipped. Dovish comments from Governor Bollard following the interest rate announcement the main reason for the fall as future rate hikes are likely to be more moderate going forward. The NZD has been on the rise since and currently sits at 0.7264 versus the Greenback. Sterling has fallen off against the Aussie and gained on the Kiwi due to this and GBP/AUD opens today’s session at 1.7333 and GBP/NZD 2.1518.

- We expect a range today in the GBP/AUD rate of 1.7210 to 1.7480

- We expect a range today in the GBP/NZD rate of 2.1290 to 2.1600

:: Data Releases:

AUD: Private Sector Credit m/m
EUR: German Unemployment Change
GBP: Nationwide HPI m/m, Net Lending to Individuals m/m, GfK Consumer Confidence
NZD: Building Consents m/m
USD: Unemployment Claims

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