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 • BoE Governor speech due at 13:45 - Carney to pour cold water on hike bets.
• German IFO strikes 16-month high - GBP/EUR down half a cent.
• US Consumer Confidence rises - USD absorbs defensive inflows due to Syria concerns.
• Crude oil rallies boost CAD - GBP/NZD up 1.3 cents.
Sterling With financial markets wary of the conflict in Syria spiralling out of control the Pound found itself gaining against the high risk 'Aussie' and 'Kiwi' Dollars but falling against the safe haven US Dollar yesterday. UK Prime Minister David Cameron suggested that the British government could launch an assault on the Assad regime in response to the alleged chemical weapons attack that took place in Damascus last week. The very real threat of another prolonged conflict in the Middle East has sent stock markets reeling across the globe: the Japanese Nikkei shed -0.70%, the UK FTSE 100 lost -0.66%, the German Dax declined -2.1% and the US S&P 500 slid -1.0%. Later on today Bank of England Governor Mark Carney is due to give a speech on the health of the British economy. It is widely expected that the Central Banker will attempt to discourage UK interest rate hike speculation in order to keep borrowing costs in Britain low for consumers and businesses. Sterling is likely to come under some selling pressure if investors take Carney's argument for a long period of ultra-low interest rates seriously. Euro The Euro strengthened by around half a cent against the Pound yesterday as traders reacted positively to a full set of better-than-expected German IFO survey results. The Current Conditions indicator rose from 110.1 to 112.0 in August and the Expectations index advanced from 102.4 to 103.3. However, the Business Climate index, which carries the most weight, surged from 106.2 to a fresh 16-month high of 107.5. The outperforming German figures support the theory that the Eurozone's largest economy is back on track to drive the currency bloc forward throughout the remainder of the year. Despite signs of political conflict in Italy, where some of Silvio Berlusconi's PDL party members have threatened to resign if an unpopular tax on second homes is not abolished in the next couple of weeks, and fears of another messy conflict in the Middle East, the single currency performed remarkably well against the Pound yesterday as traders started to price in the possibility of a fairly respectable set of Eurozone GDP numbers in the third and fourth quarters. The Euro was also supported by more comments from the Bundesbank suggesting that interest rates could well be raised in the medium-term if economic conditions continue to improve. US Dollar Sterling declined by around half a cent against the US Dollar yesterday as the Syrian conflict fuelled risk aversion flows and domestic data printed favourably for the 'Greenback'. As the world's premier safe haven currency the US Dollar is liable to strengthen in times of political uncertainty as traders send their funds on flights to safety in order to safeguard against any potential losses. The 'Buck' also appreciated against the Pound yesterday in response to a stronger-than-expected US Consumer Confidence score of 81.5. Smashing forecasts of 79.0 the robust print shows that Americans are fairly confident rega business prospects and income expectations for the coming year. The report makes it ever-so-slightly more likely that the Fed's asset purchasing programme will be tapered during September.
Canadian Dollar The Canadian Dollar rallied by around half a cent against the Pound yesterday as tensions in Syria led to concerns that crude oil supply from the Middle East could be impacted. With crude oil, which is Canada's largest export, soaring to a 6-month high demand also increased for the commodity-correlated 'Loonie'.
Australian Dollar Sterling advanced higher by around 0.8 cents against the Australian Dollar yesterday as global risk appetite waned significantly due to fears of military intervention in Syria. The 'Aussie' was also negatively impacted by some dovish comments from Reserve Bank of Australia Board Member John Edwards, who said that the Australian Dollar is: "still too strong to help, to the extent it could, in the transition we need to make". Edwards said that a weaker domestic currency would help to offset some of the damage caused by the rapid cooling of the once-in-a-century mining-investment boom.
New Zealand Dollar As a high-risk currency the New Zealand Dollar was also victim to risk aversion flows yesterday and the 'Kiwi' Dollar is now trading within a cent of a yearly low against the Pound. GBP/NZD surged higher by 1.3 cents. 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,
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