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 Q2 GDP confirmed at 0.7% - yearly figure down to 1.3%.
• UK Current Account widens - Business Investment slides.
• GBP/USD down half a cent - US Jobless Claims impress.
• GBP hits 3.5-yr high vs. CAD - Canadian crude oil prices fall.
Sterling The Pound lost a bit of momentum yesterday as investors reacted to the final second quarter GDP revision. Encouragingly, the quarterly expansion was confirmed at 0.7% and Manufacturing output was revised higher to 0.9% - its highest level since 2010 - but sentiment towards Sterling was damaged by news that annualised GDP was downgraded from 1.5% to 1.3%. The Pound was also hurt by data showing that the UK Current Account deficit widened by £1 billion more-than-anticipated in the second quarter to -£13 billion and that Business Investment tanked by -2.7% during the same period. Although the fairly potent GDP print was contaminated with some unexpected nasties, Britain's economic outlook still looks fairly bright and many analysts expect growth to accelerate towards 1.0% in the third quarter, which has the potential to re-ignite Sterling's broad market rallies.
Euro The single currency was subject to some jittery trading yesterday as fears of political instability in Italy re-emerged as Renato Brunetta, a close aid to PDL party leader Silvio Berlusconi, said that support could be removed from Italian PM Enrico Letta's coalition government if Berlusconi's ban from office is enforced. Brunetta denied that Berlusconi himself had instigated the move; rather she argued it was a question of morality: "There was no proposal for a mass resignation. We have only asked each parliamentarian to reflect on and decide according to his or her conscience." The situation was exacerbated by news that Italian President Giorgio Napolitano had pulled out of an appearance due to a "sudden and disturbing political development". This caused the Italian stock market to decline by -2% and bond yields to rise by 8 basis points.
US Dollar Sterling sunk by around half a cent against the US Dollar yesterday as the British Current Account deficit, which has been running since 1998, widened to a softer-than-anticipated -£13 billion. The US Dollar was also buoyed by a fairly sanguine Initial Jobless Claims print of 305,000. Following two successive weeks of largely ignored figures, the latest print featured a full set of data and therefore bolstered demand for the 'Greenback', as technical errors in California and Nevada were rectified. The US labour market appears to be performing moderately well at the moment and, despite a run of below forecast Non-farm Payroll reports, the four-week Jobless Claims average is currently running at 308,000 - its lowest level since June 2007.
Canadian Dollar The Pound failed to capitalise on the confirmation that the British economy expanded by an impressive 0.7% in the second quarter, as traders focussed on an unsavoury £1 billion increase in the Current Account deficit and a fairly downbeat -2.7% quarterly drop in Business Investment. Low prices offered for Canadian-brew crude oil continued to restrain the 'Loonie' against the US Dollar, but GBP/CAD steeped to a -0.6 cent daily defeat.
Australian Dollar The risk-sensitive Australian Dollar advanced by around 0.35 cents against the Pound yesterday as a combination of disappointing UK trade figures and potentially sentiment-boosting news from Japan helped to impel the Antipodean currency higher versus Sterling. During the Asian session, news surfaced that the Japanese government is looking into reducing its corporate tax rate and this drove risk sentiment higher in the region, which subsequently saw demand increase for the 'Aussie' Dollar.
New Zealand Dollar Sterling sunk to a -1.3 cent daily loss against the New Zealand Dollar yesterday. The reasons for the Pound's decline were almost identical to that of GBP/AUD - soft UK Current Account data and risk-on Asian trading - only they were exaggerated by the fact that the 'Kiwi' Dollar is a slightly more volatile currency than its Antipodean counterpart. 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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