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.
Sterling
Sterling made gains against the majority of major currencies towards the end of last week after a positive retail sales result increased hopes of a sustained economic recovery in the UK. The pound climbed back towards a 6-week high of 1.1700 against the Euro and traded above 1.5600 against the US Dollar.
The main focus for the UK this week will fall on the second estimate of Q2 GDP data. The report, due to be released on Friday morning, is anticipated to fall in line with previous results, reconfirming that the UK economy grew by 0.6% during the second quarter. Markets will also be looking closely at other aspects of UK growth; Industrial orders and housing data for the UK are expected to show an improvement during the week ahead.
Euro
CPI data released on Friday morning confirmed that inflation in the Euro-zone remained at 1.6% for the second straight month in July. The Euro-zone trade balance also reported 17.3 billion Euros for June, up from a revised 14.5 billion Euros in May.
Last week, positive GDP data saw the Euro-Zone pull out of its longest recession to date after 6 consecutive sessions of contraction. The detailed breakdown of this report is due to be released on Friday morning, markets will be watching the outcome of this report closely and will be focusing on any further signs of recovery.
Thursday's PMI survey for manufacturing and services within the Euro-Zone are expected to show a modest improvement, and Friday's Consumer confidence report is expected to show that confidence levels have increased to the highest levels in over two years. US Dollar
Recent speculation that the Federal Reserve could begin reducing stimulus measures as early as next month weighed on demand last week for US denominated assets, causing stocks to fall and treasury yields to reach 2-year highs. The Dollar weakened towards a 2-month low against Sterling and reversed gains against the Euro and Yen.
The week ahead is comparatively quiet in terms of economic data, but all eyes will be on the minutes of the July FOMC meeting due for release on Wednesday. Markets will be looking at the FOMC meeting for direction, and therefore the tone and content of discussions during the meeting are likely to be heavily scrutinised. New Zealand Dollar The New Zealand dollar experienced a short-lived fall on Friday before making a quick recovery in the wake of a 6.6 magnitude earthquake which shook Wellington and the upper South Island. This was the biggest quake since last month's 6.9 magnitude event. As a result of the quake the country's stock exchange was closed and other parts of Wellington were shut down. Many buildings were evacuated and workers told to go home to allow structural assessments to be carried out. Lengthy traffic queues formed outside the city. Emergency services are reported to have rescued several people in Wellington trapped in lifts which stopped operating when the quake struck.
Australian Dollar
Speculation that the US Federal Reserve may well be set to begin tapering its Quantitative Easing programme as early as September created another bout of selling pressure taking GBP/AUD back above 1.7000 last week.
The Dollar is being very much driven by swings in sentiment. Therefore, there will be considerable interest in Wednesday's FOMC meeting minutes. The market will be looking for any solid indications of the potential timing of QE tapering for direction.
Canadian Dollar
The Canadian dollar pulled back during trading last week, following the release of improved weekly jobless claims numbers from the United States. Speculation over a reduction in QE from the Federal Reserve helped Sterling gain against the CAD taking the rate up towards 1.6100 against the Pound.
Reports this week are expected to show that retail sales in Canada declined for the first time in three months in June, but as with the majority of currencies the main focus will fall on the timing of the Fed's reduction in QE to provide direction. 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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