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 • Sterling still strong following BoE statement - interest rates forecast to rise in next 3 years.
• ECB reduces GDP projections - GBP/EUR stays flat.
• US Jobless Claims up slightly - GBP/USD rallies.
• Chinese imports grow 10.9% - 'Aussie' gains 1.2 cents.
Sterling Following the excitement of the Bank of England's forward guidance announcement on Wednesday forex markets were decidedly quieter yesterday. Governor Mark Carney commented that he intends to help British banks "change their culture" in order to prevent further crises from spiralling out of control, but Sterling was largely unaffected by the comments as the Pound continued to bask in the glory of the Quarterly Inflation report. With further quantitative easing unlikely in the UK, unless the recent run of positive indicators comes to a halt, and investors now forecasting an interest rate hike slightly sooner-than-previously-anticipated, the Pound looks set to maintain a bullish bias versus its major currency rivals.
Euro The Pound sailed along Lake Placid against the Euro yesterday as markets were unmoved by comments from the European Central Bank. In its Monthly Report, the ECB reduced its 2013 Eurozone growth forecast from -0.4% to -0.6%, and downwardly revised its 2014 projections from 1.0% to 0.9%. The Central Bank reiterated Mario Draghi's stance from the beginning of the month: that rates will remain low for the foreseeable future; that inflation looks set to stay close to the 2.0% target in the medium term; and that the currency bloc has emerged from its darkest days of recession and should post modest quarterly growth by the end of the year.
The German Trade Balance improved to €16.9 billion in June as exports improved by 0.6% and imports declined by -0.8%. Although the surplus widened, it was not considered bullish for the single currency because exports came in -0.3% lower-than-expected.
US Dollar Sterling forced its way to a 0.6 cent gain against the US Dollar yesterday as GBP/USD trudged on following the BoE's admission that interest rates would be hiked if: economic conditions improved; Unemployment falls to 7.0%; or inflation remains 0.5% above target for 18-24 months. Across the pond in the US it was announced that Initial Jobless Claims rose by 5,000 last week - 2,000 less than economists had predicted. The jobless situation in America remains an important factor behind the Federal Reserve's decision to continue with its $85 billion a month asset purchasing programme, which is seen to have a negative impact on the US Dollar.
Canadian Dollar The risk-sensitive Canadian Dollar posted a slender 0.3 cent gain against the Pound yesterday as improvements in Chinese trade figures gave rise to increased confidence in crude oil, which is Canada's most lucrative export. The 'Loonie' was also bolstered by a slightly better-than-expected New Housing Price Index of 1.8%, beating forecasts of 1.7%.
Australian Dollar The Australian Dollar surged by around 1.2 cents against the Pound yesterday as trade data out of China outperformed market expectations. Chinese purchases of crude oil and iron ore rebounded from multi-month lows to reach record highs in July, contributing to an impressive 10.9% jump in imports, which was over five times stronger than traders had anticipated. The 'Aussie' Dollar rallied as the robust data raised hopes that Chinese demand for Australian mining exports would continue to drive the domestic economy forwards.
New Zealand Dollar The New Zealand Dollar strengthened by around a cent against Sterling yesterday as traders continued to put their faith back into the Antipodean currency. The Reserve Bank of New Zealand is considering hiking the benchmark interest rate and the domestic economy is on the up, provided that the dairy scandal does not escalate further, which puts the 'Kiwi' Dollar near the top of the pile when it comes to investment currencies. 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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