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 considers polymer banknotes - no significant UK data.
• Italian Q2 GDP revised down to -0.3% - Berlusconi threats damage sentiment.
• Possible resolution in Syria boosts risk sentiment - GBP/USD rallies.
• Canadian Building Permits rise - GBP/CAD stays flat.
Sterling Due to a dearth of fresh UK economic data, Sterling traders were left to consider the implications of the Bank of England's latest transitory proposal: the UK Central Bank intends to introduce polymer banknotes by 2016. Perhaps coinciding with the first interest rate hike since 2007, the introduction of plastic notes would bring the monetary system in Britain a tiny bit closer to Governor Mark Carney's homeland; Canada has benefitted from the cleaner, more durable notes since 2011. Although the proposal did not have a discernible impact on Sterling trading, it would make each banknote washing-machine proof!
Euro The Pound posted a minor 20-pip gain against the Euro yesterday as Italian GDP was revised slightly lower for the second quarter, from -0.2% to -0.3%. The negative revision piled pressure on the Eurozone's third largest economy, which is currently embroiled in another political crisis surrounding Silvio Berlusconi. The disgraced former Prime Minister has threatened to bring down Enrico Letta's ruling government if his ban from office for tax fraud is upheld. The media magnate retains hope that he will be able to get the sentence overturned despite already having failed with an appeal. The problem is that Berlusconi's PDL party is vital to the coalition government; if he and his supporters retract their support the country will be thrown into a fresh period of political instability. This could seriously derail investor confidence and subsequently reignite the debt crisis in Italy. In other Eurozone news, the French went on strike in the name of social rights, a metaphor to describe the Eurozone was hijacked to tragic effect as IMF Director Christine Lagarde's description of the currency bloc as a "beautiful ship" not ready for the "rough seas" encouraged comparisons to the Titanic, and the Cypriot government was blamed for the fall of the island nation's biggest bank, the Bank of Cyprus.
US Dollar The Pound to US Dollar exchange rate re-asserted itself above technical resistance levels yesterday following a 0.3 cent climb in reaction to reduced safe haven flows. Demand for the world's go-to safe haven currency diminished yesterday as fears of a military strike in Syria receded slightly in light of comments from US President Barack Obama suggesting that a diplomatic resolution could be achieved if Syria accepts Russia's proposal to give up its chemical weapons pile.
Canadian Dollar The Canadian Dollar remained flat against the Pound yesterday as it was reported that Canadian Housing Starts sunk by the most in seven months during August; the Federal Housing Agency said that the fall was due to a lack of new residential condo projects. The disappointing domestic data print wiped out earlier gains that came as a result of some encouraging Chinese ecostats earlier in the morning.
Australian Dollar The commodity-sensitive Australian Dollar advanced by around 0.8 cents against Sterling yesterday, buoyed by an impressive 10.4% rise in Chinese Industrial Output. China is Australia's largest trading partner and robust factory output figures in the Asian giant suggest that demand for Australian mining products should continue at a relatively sturdy level during the next few weeks. It was also reported that the Australian NAB Business Confidence index rose from -3 to +6 during August, which also bolstered demand for the 'Aussie'.
New Zealand Dollar GBP/NZD ceded -0.5 cents yesterday as decent Chinese figures including the aforementioned Industrial Production print, a 13.4% rise in yearly Retail Sales and a 20.3% increase in Fixed Assets boosted investors' appetite for risk in the Asian-Pacific region. The risk-correlated 'Kiwi' Dollar was also lifted by hopes that military intervention may not be necessary in Syria. 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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