Currency Blog | International Money Payments | Excel Currencies

Sterling GBP Negative in Short Term Due To 50Bln Quantitative Easing

Ashley Ingle Currency Broker — Thu, 09 Feb 2012 19:38:48 +0000

The MPC decision at noon today will grab domestic markets’ attention. A series of better forward-looking indicators- including the recent PMIs- have suggested that the UK may be benefitting from something of a cyclical pick-up, leading some to question the need for fresh policy stimulus. To Lloyds TSB, any cyclical recovery will l come up against continued stiff headwinds of structural adjustment – as evidenced by the recent contraction in consumer credit and declines in broad money. Lloyds TSB think the MPC will provide a further £50bn stimulus today and as such should issue an accompanying statement. This will give some clues to the updated medium-term forecasts that will accompany next week’s Inflation Report. In turn, this will help determine which force, cyclical or structural, the MPC thinks is likely to prove the dominant and hence determine the prospects for further stimulus after today. Ahead of the MPC meeting, December’s industrial production figures are released. Preliminary estimates of Q4’s outturns were part of the first estimate of GDP. Lloyds TSB forecasts of a 0.3% rise in industrial output in December is broadly consistent with those findings. Lloyds TSB do not expect them to lead to a Q4 GDP revision.

EUR/GBP – Today’s decision on QE is likely to determine the direction in EUR/GBP today, and for the rest of the week. We expect a £50bn addition to the total, in common with most in the market, and this would probably be seen as short term slightly sterling negative in that sterling would be further associated with “QE” currencies that are a long way from raising rates. As long as risk appetite remains well supported, this will tend to weigh on the pound. As the chart below shows, even the euro could have potential to gain if the euro crisis concerns are put to bed. We doubt this will be the case even if the next Greek package is agreed on, but it would suggest some upside risks to EUR/GBP in the short term.

The Greek tragedy continues. Yesterday it looked like the Greek coalition government had agreed on austerity measures, but negotiations continued overnight and comments from Greek officials this morning indicate that the government has not yet been able to fulfil the Troika’s demands. EU and IMF officials participated in the negotiations overnight and this morning Greek Finance Minister Venizelos said that a deal had not been reached yet. Hence, we are well into the 11th hour and there is still no deal prior to today’s crucial EU meeting. If the Greek government fails to agree internally it will be impossible for EU ministers to give the go-ahead for a new Greek bailout, which will most likely result in a disorderly Greek default in March. ECB President Mario Draghi’s press conference should be the key international focus, although Lloyds TSB expect no change in policy after today’s Governing Council meeting. The 3-year LTRO conducted at the end of last year has gone a long-way to averting a credit crunch and provided some optimism over the immediate outlook for Euro area growth. With the second of these two operations scheduled for 29 February, the ECB is likely to keep a watching brief for now. Draghi is likely to be quizzed on the ECB’s ongoing SMP bond purchases; the expected scale of the next LTRO; and the ECB’s involvement in the Greek debt swap. Lloyds TSB doubt whether he will answer any of these questions definitively.

The HUF has been the world’s best performing currency this year, and emerging markets in general have performed well. While there is still little reason to be positive on European growth, any reduction in risk premia should continue to benefit the currencies that suffered most from the crisis last year, especially if they offer an attractive yield. While there are obvious longer term issues for Hungary, any continuation of the recovery in sentiment towards the EUR should continue to support the HUF. 286 should be an initial target for EUR/HUF.

The USD managed a modest recovery against most currencies yesterday, but remains essentially dependent on fluctuations in risk appetite, which continue to depend on European developments. There is no major support for the USD index this side of 77.40, and clear negative news on risk seems required to break above 79.50.

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

Greece to Approve Austerity Measures EU, ECB & IMF Demanded?

Ashley Ingle Currency Broker — Wed, 08 Feb 2012 11:50:15 +0000


		GBP-EUR		1.19769
		GBP-USD		1.58821
		GBP-AED		5.8298
		GBP-JPY		122.3
		GBP-CAD		1.58131
		GBP-CHF		1.45038
		GBP-HUF		346.51
		GBP-TRY		2.77735
		GBP-AUD		1.46805
		GBP-ZAR		11.986
		GBP-NZD		1.89481
		GBP-SGD		1.9765


		GBP-PLN		4.9932
		GBP-HKD		12.316
		GBP-THB		48.706
		GBP-MYR		4.7734
		EUR-USD		1.32658
		EUR-AED		4.8687
		EUR-TRY		2.31433
		EUR-AUD		1.22589
		USD-CAD		1.99549
		USD-JPY		77.054
		USD-NZD		1.19272

(Please note these rates were taken at 11:30am GMT, rates do fluctuate every 2 – 3 seconds)

If you need any other exchange rates then please don’t hesitate to contact me.

EUR/GBP edged higher yesterday, as the EUR rallied on optimism towards Greece. After some good numbers from the UK, there have been doubts whether the BoE will announce additional asset purchases at tomorrow’s meeting. But market consensus expects another £50bn of QE; this could see this weigh on GBP performance today. And with Greece nearing an agreement, EUR/GBP will likely continue to edge higher towards the 0.84 level.

EUR has largely been able to hold on to yesterday’s gains on hopes that a deal will eventually be reached in Greece. EUR/USD is this morning trading 1.325. Events in Greece surrounding the outcome of any agreement on fiscal austerity measures required for the country to receive its second bail out package are likely to dominate news flow and market sentiment today. A second €130bn bailout is needed by the country before a €14.5bn bond payment comes due in March. Focus will remain on Greece, where the party leaders in the unity government are expected to meet before noon today and possibly approve the austerity measures demanded by the EU, ECB and IMF. Although there is no hard deadline, it would most likely be negative for risk sentiment if the austerity measures are not approved today.

In Germany, Lloyds TSB expected trade data for December to confirm that exports are slowing faster than imports as external demand for the country’s goods waned. The trade balance in December is likely to have slipped from €16.2bn in November to €13.7bn in December. Consensus estimates are for the current account surplus to widen by €9bn from €143bn in November. German exports grew by an estimated 8.8% last year but the pace of growth is forecast to slow to 4.1% in 2012, as GDP growth slides from 3.0% to 0.5%. However, the latest IFO and PMI surveys for January do point to the possibility of stronger demand for exports from outside the euro area, which gives hope that Germany may avoid recession in Q1 of this year.

In the US the race for Republican presidential nomination appears to remain open after Rick Santorum won the non-binding primary in Missouri and the caucus in Minnesota. Santorum was also ahead in the Colorado caucus that has not yet been called, according to Bloomberg. Data released yesterday showed that consumer credit in the US in December for the second month in a row expanded much faster than expected suggesting deleveraging has started to ease. USD traded lower yesterday as EUR/USD made year highs on optimism towards Greece; even the news that the meeting between the Greek party leaders was delayed to today did little to hamper risk sentiment overnight. USD/JPY edged higher during the risk-on move as spreads moved in favour of USD. But USD/CHF traded lower largely due EUR strength which saw EUR/USD and to a less extent EUR/CHF higher. With risk sentiment still positive on Greece, the downside bias to USD will likely remain today.

	Today’s report was brought to you by Ashley Ingle

The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The author(s) cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

Global FX Market Focus on Greek Coalition Government – 2nd Bailout Package or Default?

Ashley Ingle Currency Broker — Tue, 07 Feb 2012 18:00:36 +0000


		GBP-EUR		1.19874
		GBP-USD		1.58913
		GBP-AED		5.8326
		GBP-JPY		122.125
		GBP-CAD		1.58139
		GBP-CHF		1.44991
		GBP-HUF		347.62
		GBP-TRY		2.78214
		GBP-AUD		1.46681
		GBP-ZAR		11.973
		GBP-NZD		1.8979
		GBP-SGD		1.9729


		GBP-PLN		5.00579
		GBP-HKD		12.273
		GBP-THB		49.005
		GBP-MYR		4.7802
		EUR-USD		1.32562
		EUR-AED		4.8659
		EUR-TRY		2.3208
		EUR-AUD		1.22755
		USD-CAD		0.99523
		USD-JPY		76.869
		USD-NZD		1.79653

(Please note these rates were taken at 5:45pm GMT, rates do fluctuate every 2 – 3 seconds)

If you need any other exchange rates then please don’t hesitate to contact me.

Sterling continued to edge higher on a quiet day for FX, with doubts about the extent of QE this Thursday continuing to provide some support, as well as better economic sentiment and the general USD and EUR malaise. But sterling’s gains on the back of USD and EUR weakness look a little false – there is little to recommend the UK above the US, and we would expect a struggle to make ground towards 1.60 unless dragged by a sharp EUR rally. Even then, EUR/GBP is likely to take a lot of the strain, and 1.5950/1.60 should prove good resistance.

Make or break for Greece? This remains the key theme for the global FX markets. Overnight the euro as been under some pressures. The outcome of today’s meeting in the Greek coalition government will lead the way for the euro today. Today is relatively light on data, with German industrial production the only tier one release amongst the advanced economies. Similar to most euro area economies, an escalation in risks associated with the region in August led to a sharp erosion in German business sentiment, which quickly transpired to industrial production contracting for four out of the past five months. While yesterday’s stronger than expected factory goods for December, suggests that there is some upside risk to our December industrial production forecast of -1.5% m/m, it is still likely that it will disappoint. And unless activity rose by more than 4.5% in the month, the level will remain below that in July.

French President Sarkozy and German Chancellor Merkel presented a united front yesterday, proposing the setting up of an account for Greece’s interest payments to guarantee lenders are paid in full. However, Greece still needs to agree on the latest austerity demands by the troika before the required second bailout package can be discussed and agreed upon. This has been a drawn out process and has already led to the postponement of the euro area’s finance ministers meeting, originally scheduled for Monday. The Greek political parties will meet today to hammer out the details of the new measures but there is a substantial risk that progress remains laboriously slow, which would push periphery bond yields higher. German Chancellor Merkel will be speaking tonight on the future of the euro but it likely that she will focus on higher level themes, particularly as Greece negotiations continue.

The USD fell back at the end of a quiet European session yesterday, with support above 1.30 in EUR/USD holding in spite of the lack of any news from Greece. The USD continues to trade very soft this year, which surprises some who cite the better numbers relative to Europe. But with no rise in US yields likely to result from higher rates, and US equities relatively expensive compared to the euro area, there aren’t a lot of reasons to buy the USD or USD assets on good news. So the USD for now looks likely to be determined more by news from the euro area. The failure to break higher on the lack of positive EUR news suggests risks are mounting of a lower USD if EUR news is more positive. But in the absence of news from Greece, range bound conditions should persist. Meanwhile, in the absence of US data today, the only key event across the Atlantic is Federal Reserve Chairman Bernanke’s testimony to the Senate Budget Committee. Lloyds TSB expect him to maintain the Fed’s dovish tone regarding the US economic outlook, despite the stronger than expected January non-farm payrolls.

This morning the Reserve Bank of Australia (RBA) announced that it has kept its key policy rate unchanged at 4.25% after its regular monetary policy meeting. The RBA had been expected to cut its key policy rate and as a consequence the Australian dollar strengthened. The Aussie dollar has also been supported by higher commodity prices recently.

	Today’s report was brought to you by Ashley Ingle

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

Text Book Risk Appetite Responses – USD Weakens, Commodity & Emerging Currencies Rally

Ashley Ingle Currency Broker — Mon, 06 Feb 2012 16:58:31 +0000


		GBP-EUR		1.20678
		GBP-USD		1.58174
		GBP-AED		5.8058
		GBP-JPY		121.126
		GBP-CAD		1.57531
		GBP-CHF		1.45579
		GBP-HUF		352.41
		GBP-TRY		2.78211
		GBP-AUD		1.47361
		GBP-ZAR		11.946
		GBP-NZD		1.89699
		GBP-SGD		1.9746


		GBP-PLN		5.02938
		GBP-HKD		12.264
		GBP-THB		48.834
		GBP-MYR		4.7576
		EUR-USD		1.31066
		EUR-AED		4.811
		EUR-TRY		2.30577
		EUR-AUD		1.21886
		USD-CAD		0.99847
		USD-JPY		76.61
		USD-NZD		1.20325

(Please note these rates were taken at 4:30pm GMT, rates do fluctuate every 2 – 3 seconds)

If you need any other exchange rates then please don’t hesitate to contact me.

EUR/USD failed to benefit from the strong US numbers, as concerns surrounding Greece weighed on the Euro. There was progress over the weekend regarding talks on the second Greek bailout while some terms had been agreed, some demands were not. Reports suggest the three Greek party leaders are due indicate whether they will accept the terms midday today. This will likely weigh on market sentiment and put downward pressure on EUR/USD through much of the morning as we wait for more news from Greece. Today’s Germany Factory Orders are expected to be stronger, but will likely be overshadowed by headlines from Greece.

Friday brought another round of relatively strong US macroeconomic data as the US labour market report showed that 243k new (non-farm) jobs were created in January and US unemployment dropped to 8.3%, the numbers seems to confirm that the recovery in the US economy continues, which is clearly good news in terms of risk sentiment. Not surprisingly, the market reaction was textbook: US stock markets jumped (as did the European markets), US bond yields rose, the dollar weakened and Emerging Markets in general rallied. The positive sentiment has carried over this morning’s trading in Asia with Asian stock markets posting moderate gains. However, the positive sentiment is being soured by continued worries about the Greek situation and the European crisis in general.

Over the weekend negotiations within the Greek coalition government have continued. Technocrat Prime Minister Papademos in a statement said that the leader of the coalition parties has agreed on new austerity measures including wages, but a spokesman for the socialist PASOK – a key coalition party – said that some major issues and demands from EU’s so-called Troika remain unsolved. The negotiations will continue on Monday, but it seems very hard for especially PASOK to accept the wage cuts in the private sector that are being demanded. We are nearing the final deadline (today!) and with some key stumbling blocks still unresolved, there is a real risk that Greece will not get another bailout from the EU. The worries about Greece seem to be putting a bit of pressure on the euro this morning, but they are hardly major market moves and it looks like the markets are just waiting to see what will happen when Greece’s final deadline runs out at 11.00 CET today.

USD suffered vs risky currencies on Friday after stronger numbers from the US. US payrolls rose more than expected, and the unemployment rate continued to fall in January; ISM Services were also strong, further helping equities and risky FX (SEK, AUD, CAD) trade higher. But USD made gains vs JPY and CHF as rates spreads widened in favour of the US; US yields had notably declined after the Fed announcement that rates could stay low until late 2014 in January. With on-going uncertainty surrounding Greece, market sentiment will remain soft today and Lloyds TSB expect to see continued upside bias to USD.

CHF weakened on Friday. SNB Vice-Chairman Jordan re-iterated the SNB’s commitment to defend the 1.20 EUR/CHF floor however also revealed investigations were being done on the influence of the government on the SNB, which could potentially limit the size of FX intervention. This could have been the cause of EUR/CHF persist downtrend in recent weeks. However EUR/CHF edged higher on Friday after the Swiss government showed their support, saying that the floor of 1.20 was an absolute minimum; helping the market to regain confidence towards the SNB. We maintain the view that the 1.20 floor will hold for now

CAD a risk positive North America proxy – Weak employment and subdued growth over the past few months has weighed on CAD performance. CAD has largely lagged behind the other commodity currencies since the end of last year, with AUDCAD reaching new highs since the 90s last week. While the Canadian employment numbers were disappointing on Friday, surprising on the downside, CAD still performed well largely helped by strong US payrolls and ISM numbers, highlighting its status as a proxy for North America during risk positive periods. MXN was also one of the best performers in EM on Friday.

	Today’s report was brought to you by Ashley Ingle

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

EUR/USD to Hit Low 1.2624 in Q1 2012 – Danske Bank Forecasts

Ashley Ingle Currency Broker — Mon, 06 Feb 2012 16:28:14 +0000

The coming week should be relatively quiet in terms of US data releases, following this week’s busy schedule. On Friday trade balance figures are not expected to show any major pickup in either export or import figures. Additionally, Danske expect University of Michigan consumer confidence to hold its ground, as we expect the recent increase in gasoline (petrol) prices to be cancelled out by the last few week’s equity gains. We are due only a few Fed speeches next week, with hawk Richard Fisher and the two neutral FOMC members John Williams (the only one with voting rights) and James B. Bullard speaking.

US non-farm payrolls surprised on the upside, rising 243k. Net revisions in previous months were +3k. This was stronger overall than consensus of 140k and Danske’s estimate of 135k. The unemployment rate also surprised by falling further to 8.3% – the lowest level in three years. The payrolls income proxy rose 5.3% (3M AR), which provides a solid base for consumption growth. With the second major gain in a row, the 3M average is still around 201k – unchanged from the previous two months. Danske believe this will continue to rise into the 150-200k territory in coming months, as growth is picking up at the beginning of 2012. Danske now see some upside risk to their GDP forecast of 2.5% next year, as employment dynamics are stronger than expected.

Bernanke’s semi-annual monetary policy testimony to the Senate on Tuesday is likely to maintain the Fed’s dovish sentiment for now.

US to outperform the other developed economies, once again, with economic growth of around 2.5% – 3% in 2012, despite recession in Europe. Rising productivity and a better balanced internal debt position is underpinning the recovery. Unemployment could hence fall more sharply than expected.

The arguments for buying the dollar have faded going into 2012. Not as a result of Europe’s debt profile becoming more sustainable but as a result of improved global economic data and a more aggressive easing of monetary policy by the major central banks. The Fed’s indirect promise of QE3 should the US economy slow again only confirms Danske’s expectation of a structural dollar downtrend. Not least against the commodity currencies but also against the stronger cyclical emerging market currencies. The outlook against the euro is less certain, though.

Eurozone debt risks remain elevated and relative rates continue to signal a flat or slightly falling EUR/USD from here. However, going into 2012, the market was already positioned for a bigger euro depreciation, which has, so far, not materialised. This leaves potential for position unwinding to support EUR/USD further and Danske see increased arguments in favour of the 13 January low of 1.2624 being the low for this quarter.

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

Eurozone Sovereign Debt Crisis Hitting Consumer & Company Spending

Ashley Ingle Currency Broker — Mon, 06 Feb 2012 16:19:43 +0000

Another week closes with the promise of a deal on the Greek PSI debt swap. The urgency for such a deal is rising with a hard deadline of 13 February approaching. The coming week will be a question of sequencing. The coming days should see Greece agree with the Troika measures to address deficit target slippage. This needs to be done by Monday’s Euro Area finance ministers meeting so it can approve Greece’s second bail out package, in turn necessary to allow the PSI deal to progress. The actual debt swap is slated for the second half of this month, to provide Greece with funds to meet its €14.5bn payment on 20 March. Markets remain sanguine over this sequence, but risks are evident.

Danske expect the ECB Governing Council meeting on Thursday to reflect not only the ECB’s alertness due to the substantial credit tightening taking place but also that the ECB is taking some comfort from signs that the euro area recession will be very short lived as data have started to improve and financial market stress has calmed down. Danske expect the ECB to keep interest rates unchanged and not announce any now instruments.

The coming week will focus on the prospects of further central bank stimulus. The ECB should keep policy unchanged. The ECB’s 3-year LTRO has provided a significant boost and gone some way to providing two of the three pillars necessary to resolving the Euro area’s debt crisis (growth stimulus and a contagion firebreak). The next operation is scheduled for 29 February and speculation has mounted that it could draw €1trn of demand. This would be an expansion of the ECB’s balance sheet of around 14% of GDP, not far short of the BoE’s current quantitative easing (18%). With this operation waiting in the wings, the ECB is likely to stand pat for now with the prospect of a narrowing of the interest rate corridor allowing a lowering of the refi rate still a possibility over the coming months. This month’s press conference will likely pose questions over the likely LTRO uptake, the ECB’s involvement in the Greek debt swap and the ECB’s future SMP purchases – none of which Lloyds TSB think Mr Draghi will be inclined to answer definitively.

Danske expect industrial production data for December to show a two-speed Europe but it may also give some indications that the industrial cycle has bottomed out – at least in some core countries. Euro area retail sales are set to remain weak.

Data suggest that recession in the euro area is almost a certainty in the first half of the year. German growth fell by 0.3% in Q4 and also looks like falling in Q1 2012. The loss of business and consumer confidence from the ongoing sovereign debt crisis in the eurozone is hitting consumer spending and company spending.

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

Bank of England to Print More Money £125bn in Total (QE) – Lloyds TSB Speculate

Ashley Ingle Currency Broker — Mon, 06 Feb 2012 15:56:15 +0000

The Bank of England’s MPC, is likely to provide further stimulus. The surprising strength in the recent PMIs suggests that this month’s meeting will have more to discuss than we had previously anticipated (despite forecasting a strengthening in both indices). The Committee’s decision in January to wait for the medium-term Inflation Report forecasts has proven useful. The Committee has the difficult job of balancing early signs of cyclical recovery against the longer-term structural challenges the economy faces. The medium-term Inflation Report forecasts are still likely to show the economy flirting with recession (although downside risks may have moderated) and inflation falling steeply. Additionally, the Committee will be concerned about the ongoing structural impediments to private credit creation. These factors are likely to drive the MPC to a further £50bn of QE in February. Stimulus beyond that – Lloyds TSB factor a further £75bn after next week’s £50bn – will be more dependent on economic activity thereafter. It will also be impacted by the scale of ECB stimulus at the end of this month.

It appears that the UK economy is ‘bumping along the bottom’, with output down or up slightly from one quarter to another. Weak growth in the UK’s key markets in Europe and domestic headwinds from cutbacks in government spending will hold the economy to sub 1% growth in 2012.

Bank lending is set to fall for the first time in three years hitting businesses and consumers, according to research by Ernst & Young. (…) In a further worrying development for the financial services industry, Ernst & Young’s ITEM Club has warned that the UK could bear the brunt of an EU financial transaction tax (FTT) even if the Government opts out of it. On lending capacity Neil Blake, senior economic adviser to the Ernst & Young ITEM Club said: “We have been warning about the impact bank deleveraging could have on the economy for some time, but this is the first time there will be an annual contraction in total loans since 2009, when the UK economy was still ¬suffering from the immediate effects of the global financial crisis.” E&Y said it expects total bank loans to contract by 2.2% in 2012, with just 0.9% growth forecast in 2013. The falls come after an estimated 4.3% rise in 2011, according to The Telegraph.

The Lloyds Bank January consumer barometer was released in Monday. Like Friday’s business barometer it was less negative than last month release but confidence is still low. In particular the labour market indicators remain weak and within ranges seen during the 2008/9 recession. The balance for job prospects rose 2 points but remains very negative at -73% and well below the -50% level registered last June prior to the intensification of the euro area crisis. Last month’s 12-point fall in the balance for job security amongst those in work may have been a blip. Nevertheless this month’s reading of -24% is below the average of -21% during the recession. Meanwhile, inflation and interest rate expectations hit 26 month and 3 year lows respectively.

GBP/USD underperformed during Friday’s risk-on move, mainly dragged lower by the weak EUR. The much stronger PMI services saw a muted market reaction, and while it raises doubt over whether the BoE will announced additional asset purchases at the MPC meeting on Thursday, Lloyds TSB economists maintain their call for another £50bn worth of QE, but will likely be a closer call now.

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

Will SNB Central Bank Continue Selling Swiss Franc (CHF) Currency?

Ashley Ingle Currency Broker — Fri, 03 Feb 2012 12:22:01 +0000


		GBP-EUR		1.20588
		GBP-USD		1.58335
		GBP-AED		5.8108
		GBP-JPY		120.75
		GBP-CAD		1.58549
		GBP-CHF		1.44909
		GBP-HUF		350.44
		GBP-TRY		2.77903
		GBP-AUD		1.47875
		GBP-ZAR		12.07
		GBP-NZD		1.90371
		GBP-SGD		1.9737


		GBP-PLN		5.04042
		GBP-HKD		12.279
		GBP-THB		48.788
		GBP-MYR		4.7667
		EUR-USD		1.31639
		EUR-AED		4.8319
		EUR-TRY		2.30985
		EUR-AUD		1.2303
		USD-CAD		1.00171
		USD-JPY		76.223
		USD-NZD		1.201

(Please note these rates were taken at 11:59am GMT, rates do fluctuate every 2 – 3 seconds)

If you need any other exchange rates then please don’t hesitate to contact me.

The global economic calendar is a busy one today, which kicked off with the release Lloyds Business Barometer survey results for the month of January earlier this morning. Both the economic prospects and trading prospects components of the survey featured a rise on the month, but still suggest a contraction in UK GDP for Q1 and Q2 of this year. A stronger than expected UK manufacturing PMI for the month of January released Wednesday gave some hope that activity in the sector may avoid contraction in Q1 of this year. Lloyds TSB forecast the UK services PMI out today to show a small improvement to 54.5 from 54.0 in December. In the euro area, final services PMI data is unlikely to show any significant revisions from last weeks flash estimate. While scope for sterling strength on this looks quite limited, there is likely to be more upside if the PMI services data this morning also rallies. The pound now looks reasonably resilient in the case of both a USD rally and a EUR rally, and should benefit against the higher yielders on most scenarios today.

Chinese Premier Wen Jiabao is considering increasing Beijing’s involvement in the Eurozone’s rescue fund, he told reporters in a media briefing with German Chancellor Angela Merkel. according to Reuters. He did not make any explicit commitments, however. Meanwhile, Greece’s deal with private creditors is said to be only hours away. According to a Wall Street Journal (WSJ) report, people close to the negotiations say that only small differences remain so the agreement could be concluded “in hours”. The main delay however is, according to the paper, “the rift between the IMF and Germany”. According to the Fund, cutting the €200bn in Greek debt simply won’t do the job of getting Athens’s debt down to 120% of gross domestic product by 2020. The IMF thinks it’s necessary for the “official sector”, such as the European Central Bank (ECB), to also swallow losses on its own Greek bond holdings.

US initial jobless claims fell by 12,000 last week to 367,000, the Department of Labor said today, in a sign that the labour market may be slowly recovering. Expectations were for a reading of 371,000. Barclays Capital (BarCap) analyst Peter Newland said: “the consistent downward trend in initial claims points to a gradually improving labour market. The bulk of market attention will be focused on the US with the release of ISM non-manufacturing survey and non-farm payrolls for January. Lloyds TSB expect the former to rise from 52.6 in December to 53.0 in January, after a rise in the manufacturing ISM fell below consensus estimates earlier in the week. US non-farm payrolls are likely to show an increase to 165k from 200k in December. US data has largely surprised to the upside since Q3 of last year, so markets will be closely watching for any disappointment as a sign the US growth might once again be decelerating.

FX markets saw the euro decline on concerns about Greek debt talks dragging out. The Swiss National Bank’s acting chairman Jordan said that the bank has come under increasing political pressure over the cost of interventions, which could damage the central bank’s independence, but he also said that the SNB is ready to buy foreign currency in unlimited amounts if necessary. Overnight the Swiss franc has weakened slightly against the euro to around 1.2055.

	Today’s report was brought to you by Ashley Ingle

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

Rallies in Commodity (AUD,NZD) and EMEA (PLN,HUF) FX Currencies run out of Steam?

Ashley Ingle Currency Broker — Thu, 02 Feb 2012 12:04:54 +0000


		GBP-EUR		1.20511
		GBP-USD		1.58313
		GBP-AED		5.8108
		GBP-JPY		120.483
		GBP-CAD		1.58123
		GBP-CHF		1.45282
		GBP-HUF		351.94
		GBP-TRY		2.78648
		GBP-AUD		1.47799
		GBP-ZAR		12.194
		GBP-NZD		1.89964
		GBP-SGD		1.9734


		GBP-PLN		5.0537
		GBP-HKD		12.274
		GBP-THB		48.828
		GBP-MYR		4.7747
		EUR-USD		1.31384
		EUR-AED		4.8221
		EUR-TRY		2.31158
		EUR-AUD		1.22633
		USD-CAD		0.99865
		USD-JPY		76.113
		USD-NZD		1.19986

(Please note these rates were taken at 11:45am GMT, rates do fluctuate every 2 – 3 seconds)

If you need any other exchange rates then please don’t hesitate to contact me.

There is little in the way of key data to be released today. In the UK, the Construction PMI for January is unlikely to follow the stronger-than-expected outcome for the manufacturing sector. Lloyds TSB analysis suggests that the construction PMI survey has been more affected by seasonal adjustment effects, than either the manufacturing or services indexes. Lloyds TSB believe that the strong December outcome was boosted by the unusually mild weather, particularly when compared with the debilitating snow in December 2010. As such, Lloyds TSB expect there will be some pull back in January, although the market still expects it to remain above the 50 expansion level. Also in the UK, MPC dove Adam Posen, who has consistently argued for more QE will speak today. Lloyds TSB have pencilled in a further £50bn of quantitative easing to be announced at the next Bank of England monetary policy meeting in February.

It has been a fairly calm night with positive sentiment after the release of upbeat global manufacturing data yesterday. German Chancellor Angela Merkel has arrived in China for a three-day visit to speak with top leaders in order to boost their confidence in Europe and advance strategic partnership. Last night she indicated that she thinks rating agencies are playing too big a role. Yesterday IIF said that private creditors are close to finalising an agreement with Greece and negotiations are expected to be concluded next week. Other sources indicate that there will be an announcement on both the PSI and a second rescue package from the EU and IMF next week. Euro area producer price inflation is out this morning. A fall in non-energy commodity prices in December has led to the PPI index to decline across most euro area countries. Coupled with base effects, the market is looking for a sharp slowdown in the annual rate to 4.3% from 5.3% in November. Nonetheless, the ECB and the market are unlikely to be preoccupied with the prospect of cost push inflationary pressures with immediate concerns firmly on economic growth prospects. The FX markets saw EUR/USD fall back slightly to around 1.3170 after it strengthening to levels above 1.32 yesterday as risk appetite increased.

The US ISM manufacturing index was slightly lower than expected, rising to 54.1 (consensus 45.5, Danske 55.0) from 53.1. The details were stronger with the new orders index rising again to the highest level since April last year and the export orders index rising for the third month in a row. The number confirms that growth in the US continues at a moderate pace around 2.5% at the beginning of 2012 and that the global economy is doing better. Danske look for a further slight rise in ISM manufacturing in coming months to around 55, after which they look for it to go sideways. Federal Reserve Chairman Ben Bernanke will testify before the US Budget Committee today. In Lloyds TSB’s minds the US is now in the early stages of recovery. Labour market conditions have improved and today’s initial jobless claims are forecast to have fallen 2k to 375k. Chairman Bernanke is unlikely to deviate from the FOMC minutes’ dovish tone in a bid to keep yields low. However, brighter economic news could ultimately stretch this official view and result in upward pressure. Despite the US presidential election being 10 months away, the race is growing more intense by the day. The last few months have clearly shown that the election season has set in, as the debates on both the debt ceiling and the extension of the payroll tax holiday have highlighted. The split Congress, with a Republican majority in the House and Democrats controlling the Senate, means we are not likely to see any major decisions on the budget this side of the election.

Commodity currencies and emerging market currencies continue to march ahead Danske still see value in growth-sensitive currencies, but the latest rally has been impressive and yesterday they decided to take profit on their short GBP/PLN position and take half the profit on their overall carry basket. Will we see other traders do the same and the for rates for commodity currencies (e.g. AUD, NZD) and emerging market currencies (e.g. PLN/ HUF/ CZK) hit some resistance?

	Today’s report was brought to you by Ashley Ingle

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker

A Bailout Required for Portugal to Avoid Default?

Ashley Ingle Currency Broker — Wed, 01 Feb 2012 11:04:38 +0000


		GBP-EUR		1.19999
		GBP-USD		1.57521
		GBP-AED		5.7822
		GBP-JPY		119.843
		GBP-CAD		1.57494
		GBP-CHF		1.44552
		GBP-HUF		353.3
		GBP-TRY		2.78646
		GBP-AUD		1.47663
		GBP-ZAR		12.21
		GBP-NZD		1.9001
		GBP-SGD		1.974


		GBP-PLN		5.03955
		GBP-HKD		12.217
		GBP-THB		48.755
		GBP-MYR		4.7858
		EUR-USD		1.31331
		EUR-AED		4.8185
		EUR-TRY		2.3229
		EUR-AUD		1.23067
		USD-CAD		0.9996
		USD-JPY		76.08
		USD-NZD		1.20576

(Please note these rates were taken at 10:30am GMT, rates do fluctuate every 2 – 3 seconds)

If you need any other exchange rates then please don’t hesitate to contact me.

The first day of the month brings manufacturing PMIs. With the Chinese release published overnight and the Eurozone preliminaries out last week, focus will fall on UK and US releases. In the UK, the sharp pick-up to 49.6 from 47.7 recorded in December has led most in the markets to expect a steady reading in January, the consensus at 50.0. However, with growing corroborative evidence internationally and a sharp pick-up in the domestic CBI survey, Lloyds TSB forecast a firmer 50.8 this time – a four-month high. Lloyds TSB would see this as consistent with a stabilisation in manufacturing output, rather than an outright gain. However, with the sector contracting by 0.9% across Q4 2011, such a stabilisation would provide a relative boost for Q1 GDP. Mortgage approvals rose to a 24-month high in December, according to the Bank of England; while GFK’s index of consumer confidence in the UK improved during the month of January to -29 points, versus -33 in December and -29 one year ago. GBP benefited from yesterday’s fixing demand, but today’s focus will be on the manufacturing PMI data. If strong, and particularly if strong relative to the euro area data, we could see a test of recent EUR/GBP lows at 0.8220, with stops likely to be triggered on a break. On balance this looks likely the risk, the upside for GBP/USD is likely to be more difficult with major resistance at 1.5810.

Last night’s EU summit provided a boost early on. President of the European Council Herman Van Rompuy revealed that the permanent rescue fund (the European Stability Mechanism) and ‘fiscal compact’ had been approved at the meeting in Brussels. “Today we have taken decisions on a number of fronts in order to further restore confidence in our economies,” he said. The FX markets are concerned ahead of the Portuguese T-bill auction today. There is growing concern that Portugal may need more help to avoid a default. Note that Portuguese yields have spiked this week. The Greek negotiations that just continue to drag on also dent euro sentiment. However, the sentiment might change today. We look for a strong ISM that should support risk appetite. Greece’s prime minister Lucas Papademos lifted hopes by saying a deal with private debt holders should be reached by the end of the week. While most of the EUR weakness yesterday looks to have been related to end of month flow, there was also an element of disappointment through the day on weak German and French retail and consumer spending data, and the persisting delay in any news on Greek PSI. This leaves the EUR on the back foot coming into today, and the 1.30 area will be the initial target with 1.2930 the main target for EUR bears in the short run. There is nothing obvious on the calendar to change the more bearish tone, and experience suggests end of month fix demand can be repeated in the first day of the month, so we would not be surprised to see the low 1.29s today. However, this could prove a buying opportunity if we do see a Greek bailout deal over the next week. Meanwhile in Greece, there are rumours of a so-called gross domestic product warrant, which would pay private creditors more if Greece’s economy begins to expand, easing the loss that they are taking on the country’s debt. According to Bloomberg, the government and bondholders are near a “tentative accord” that would include the warrants.

In the US, the manufacturing ISM was revised down to 53.1 yesterday, raising the chances of an outturn below the consensus expectation of 54.5 today. Lloyds TSB forecast of 54.2 already sat below the consensus 54.5. Indeed, the run of ‘positive’ surprises in US data looks like becoming hard to maintain. Nevertheless, the ISM index around 54.0 is consistent with moderate growth. The ADP employment survey will be released ahead of the ISM index. This is the best advance guide to Friday’s payrolls release. Lloyds TSB forecast a smaller 180k gain this month (325k in December), but think Friday’s payrolls should top the 150k consensus.

	Today’s report was brought to you by Ashley Ingle

LinkedIn – http://uk.linkedin.com/in/currencybroker
Facebook – http://www.facebook.com/currencybroker
Twitter – http://twitter.com/currency_broker

Ashley Ingle website – corporate and personal currency broker