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 Gov. borrowing figures improve - Sterling still down on Retail Sales.
• Merkel wins election - Euro up vs. Pound.
• Taper could be back on in October - US Dollar mildly higher.
• Canadian CPI prints at 1.1% - rate hike unlikely.
Sterling The Pound traded with a slightly negative bias against the majority of its currency peers on Friday as investors continued to pare back their Sterling positions in light of Thursday's Retail Sales revelation, which proved that Britain's economic revival is still susceptible to setbacks. The Chancellor George Osborne will have been pleased with the latest UK Public Finances report, which showed that the government is set to meet its target of borrowing less than £120 billion in this financial year. The better-than-expected ecostat means that the UK government has borrowed £38 billion so far this year, down from £48 billion two years ago and £57 billion three years ago - last year's numbers were distorted by one-off effects. Public Sector borrowing is projected to fall just short of £100 billion by April 2014.
Euro The Pound edged slightly lower against the Euro when markets re-opened for the week last night, as traders reacted amiably to Angela Merkel's landslide personal victory in the German general election. Merkel's conservative bloc received 42% of the votes, which is a record since the German unification in 1990. The impressive show of support for Merkel and her handling of the Eurozone debt crisis, makes the 'Iron Lady' only the fourth German Chancellor to win a third term since the Second World War. The single currency benefitted on Friday from the highest Consumer Confidence score for two years, as the index rose from -15.6 to -14.9. The improvement in sentiment reflects the fact that the currency bloc has finally emerged from a six-quarter-long recession and the first few green shoots of recovery have started to sprout. However, the discord between the core and the periphery continues to weigh over future growth prospects for the currency union.
US Dollar Sterling shrunk by around -0.2 cents on Friday as Federal Reserve official James Bullard suggested that the 'taper-that-never-was' may be unleashed as early as October. The hawkish comments sent minor tremors around financial trading rooms as investors came to terms with the possibility that a cutback in asset purchases could be back on the cards next month. The US Dollar managed to absorb some defensive inflows in reaction to the comments and this scenario was only enhanced later on in the day when Kansas City Fed President Esther George said that the decision not to taper in September risks compromising the US Central Bank's credibility.
Canadian Dollar The Pound to Canadian Dollar exchange rate remains close to the highest level that it has hit since February 2010 as hopes for a rate hike in the North America country appear relatively dim. The latest Canadian Consumer Price Index report showed that inflation fell from 1.3% to 1.1% during August, keeping the figure well below the Bank of Canada's medium term target of 2.0%. The high-risk 'Loonie' was also hurt by the hawkish comments from Fed policymakers south of the border.
Australian Dollar The Pound rallied by around 0.6 cents against the Australian Dollar as last week's trading session came to a close in reaction to speculation that the Federal Reserve could, maybe-just-maybe, possibly, perhaps be on the verge of reducing the pace of its quantitative easing programme, still.
New Zealand Dollar GBP/NZD is around 0.3 cents higher as we enter a new week of trials and tribulations on the foreign exchange market. The Pound is nine cents worse off against the New Zealand Dollar than it was at the beginning of September, however, the 'Kiwi' could start to fall out of fashion with investors if taper speculation picks up again as we approach October. 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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