Friday, 3 September 2010 - Market Commentary
:: 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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