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 Mortgage Approvals hit 5-yr high - Sterling celebrates prolific August gains.
• Eurozone Unemployment prints at 12.1% - CPI inflation down to 1.3%.
• US inflation remains low - Chicago Fed impresses at 53.0.
• Canadian GDP down -0.5% MoM - Q2 growth at 1.7%.
Sterling The Pound benefitted on Friday from another trio of optimistic data as UK Net Consumer Credit rose from £0.4 billion to £0.6 billion, Nationwide House Prices printed better-than-expected at 3.5% and British Mortgage Approvals accelerated from 58,200 to a 5-year high of 60,600. The robust credit and housing market figures suggest that an interest rate hike may be needed sooner than the Bank of England anticipates. Governor Carney's failure to temper the hiked speculation earlier in the week also contributed to Sterling's relative strength last week. Further upswings in the Pound's exchange rate will be slightly harder to achieve during September as resistance toughens following Sterling's 2.0% gains against the US Dollar and 2.5% improvement against the Euro in August. Euro The Pound to Euro exchange rate advanced mildly by 0.2 cents on Friday as investors mulled over the latest batch of Eurozone data. German Retail Sales declined by -1.4% unexpectedly in August, which raised some questions as to the efficacy of the currency bloc's largest economy's nascent recovery. Consumer Prices remained subdued in the 17-nation bloc, falling from 1.6% to 1.3% in August, making it very unlikely that the European Central Bank will opt to raise interest rates anytime soon. Indeed, ECB President Mario Draghi has been banging on about keeping rates low throughout the summer, but there have been some dark mutterings from ECB Board Member Jens Weidmann suggesting that a rate hike could come around sooner-than-expected. The Eurozone Unemployment Rate printed at 12.1%, slightly lower than its all-time peak of 12.2% but still horrifically high, and therefore did little to boost sentiment towards the single currency. Additionally it was reported that Eurozone Consumer Confidence held firm at -15.6 in August. US Dollar Sterling held relatively steady against the US Dollar on Friday as the 'Greenback' was boosted by strong University of Michigan Consumer Confidence and Chicago PMI readings but damaged by poor Personal Consumption and Personal Income figures. The Chicago Manufacturing PMI accelerated from 52.3 to an impressive 53.0 in August as New Orders continued to impress. Although the Michigan Confidence survey printed better-than-expected at 82.1, the score was slightly below the 6-year high hit earlier this summer because US citizens were slightly worried about the next federal budget, which could cause problems if policymakers are once again unable to find a quick compromise on party issues. However, the level of caution is far less apparent now than in the build up to the 'fiscal cliff' and 'sequestration' earlier in the year. US Personal Consumption Expenditure Core remained flat at 1.2% in July; the inflation print does not appear to support the potential tapering of asset purchases in September, nevertheless, it is still widely expected that the Federal Reserve will announce a moderate slowdown of QE3 later this month.
Canadian Dollar Canadian Gross Domestic Product was reported to have fallen by -0.5% in June, which is the worst score since 2009. However, the Canadian Dollar managed to escape unscathed against the Pound as second quarter growth printed above expectations at 1.7%. The commodity-sensitive Canadian Dollar also benefitted from Syrian conflict fears, which drove up the value of crude oil, as US Secretary of State John Kerry said that the alleged Assad chemical attack cannot go unpunished.
Australian Dollar Sterling appreciated by around 0.3 cents against the Australian Dollar on Friday, coming within 65 pips of a fresh 3-year high, as UK data continued to impress and the burgeoning Syrian crisis continued to weigh on global risk sentiment. The 'Aussie' will remain susceptible to Fed taper fears throughout September, but could be given a boost if the Reserve Bank of Australia strike a slightly more hawkish tone during tomorrow's Central Bank meeting.
New Zealand Dollar The Pound to New Zealand Dollar exchange rate struck a fresh 14-month high on Friday, following a one-cent daily gain as traders digested the implications of a decidedly poor weak for the 'Kiwi'. Fed taper bets, a false dairy scare, Central Bank legislation and the Syrian conflict all contrived to send the New Zealand Dollar lower during August. 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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