Dear Subscriber, Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements. Headlines • UK 10-yr Gilts rally to 2-yr high – rate hike bets boost GBP.
• German CPI disappoints – Unemployment Rate holds at 6.8%.
• US GDP excels in second quarter – Jobless Claims recede, taper bets increase.
• Canadian GDP forecast to fall -0.4% – GBP/CAD approaching fresh 3-year high.
Sterling The benchmark 10-year UK Gilt yield struck a fresh 2-year high of 2.827% yesterday as markets continued to speculate that the Bank of England may be forced to raise interest rates ahead of schedule. The UK Central Bank plans to leave rates at the current record low until the Unemployment Rate falls to 7.0%, something that is not expected to happen before 2016. However, with inflation sticking stubbornly above the Bank's 2.0% target rate it is possible that the Unemployment threshold will be "knocked out" by overshooting CPI slightly earlier-than-intended. Market interest rate swaps indicate that investors are currently pricing in a rate hike before the end of 2015. Euro Sterling racked up a 0.8 cent daily gain against the Euro yesterday as the aforementioned 2-year high yield on UK Gilts stretched the gap between UK debt and German Bunds to a new 3-year high, which made the Pound more appealing to speculative investors. The single currency was also impacted by a series of underwhelming economic prints in the Eurozone's flagship economy. The German Unemployment Rate remained at 6.8%, as it has done for over a year, but the Unemployment Change figure showed that a slightly larger-than-expected 7,000 new people found themselves out of work during August. Sentiment in Deutschland was also impacted by a weaker-than-anticipated annualised German CPI print of 1.5%. After surging 0.5% in July inflationary pressures stagnated during August, which makes the probability of a rate hike from the European Central Bank a little bit less likely – sort of like how having Jack Wilshere injured made England's chances of winning Euro 2012 a little less likely: it was never going to happen anyway. US Dollar The Pound lost out by around -0.4 cents to the US Dollar yesterday as data out of the States printed considerably better than markets had been expecting. The annualised US second quarter GDP figure was revised higher from 2.2% to 2.5%, bringing the quarterly improvement up from 0.7% to 0.8%. The year-on-year score more than doubled the tepid 1.1% expansion registered in the US economy during the first quarter. Personal Consumption beat forecasts of 1.7%, coming in at 1.8% and Initial Jobless Claims sunk by 6,000 to 331,000 last week indicating that the US labour market is still performing relatively well. The optimistic data stream fanned the flames of Fed taper speculation, which boosted demand for the US Dollar. Barring a terrible US Non-farm Payrolls report next Friday, it is looking increasingly likely that the Federal Reserve will attempt to normalise its monetary policy in September by reducing the amount of assets purchased as part of its QE3 scheme.
Canadian Dollar The Canadian Dollar declined marginally yesterday in anticipation of this afternoon's domestic GDP print. Second quarter economic output is predicted to have tumbled from 2.5% to 1.6% on an annualised basis, whilst GDP is forecast to have contracted by -0.4% during June, which is likely to weigh on the 'Loonie'. GBP/CAD is trading close to a 3-year high and it is possible that another fresh peak could be reached if Canadian data prints disappointingly this afternoon.
Australian Dollar The Pound to Australian Dollar exchange rate remained fairly flat yesterday as the positive 'Aussie' influence of better-than-expected Australian Capital Expenditure was levelled out by the rise in UK 10-year government debt yields. Australian Capital Expenditure printed at 4.0%, trouncing forecasts of a more subdued 0.8% rise.
New Zealand Dollar Sterling strengthened by around 0.8 cents against the New Zealand Dollar yesterday as risk sentiment was damaged by the robust US GDP print, which spurred Fed taper fears.
If you need any further assistance, or require a live dealing quote - please do not hesitate to contact me on 01736 335250 or send an email to info@torfx.com Regards,
TorFX Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions. Unauthorised copying or re-wording of this content is prohibited. The copyright of this content is owned by Tor Currency Exchange Ltd. Any unauthorised copying or re-wording will constitute an infringement of copyright. | 
No comments:
Post a Comment