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 •Osborne says he "held his nerve" – no significant UK data.
• Eurozone investor confidence at 2-yr high – happiness levels falling in Southern Europe.
• San Fran Fed Williams supports taper plans – gives nothing away regarding September decision.
• Canadian Building Permits rise – GBP/CAD stays flat.
Sterling Chancellor of the Exchequer George Osborne told an audience of academics and business leaders yesterday that the economy has "turned a corner" and touted the latest GDP figures as vindication of the government's oft-criticised fiscal consolidation strategy. The bullish remarks had little effect on the Pound though and in the absence of any fundamental domestic drivers, the UK currency traded with a fairly neutral bias against its major rivals; any Sterling movement was largely dictated by external factors. There are no British ecostats of note due to be released today either, and subsequently the Pound is likely to find itself at the mercy of wider market trends.
Euro The Euro grew by around 0.3 cents against Sterling yesterday as the Sentix Eurozone Investor Confidence indicator printed at a 2-year high of +6.5. Smashing expectations of -3.5, the encouraging figure also marks the first time since 2011 that the confidence survey has posted a positive result. Sentix's Senior Analyst Dr Sebastian Wanke described the optimistic print as "an explosive coup for the Eurozone". However, later on in the day it was reported that the uptick in investor confidence has not led to an increase in Eurozone happiness levels. The latest United Nations world happiness survey showed that peripheral nations in the 17-nation bloc such as Greece, Spain, Italy and Portugal became much less pleasant places to live during the last twelve months. Chronic unemployment, reduced life choices, rising corruption and lack of trust in police forces were shown to be the main reasons for Eurozone despondency.
US Dollar Sterling continued to strengthen against the US Dollar yesterday in the wake of Friday's disappointing Non-farm Payrolls report. With markets now expectant of a slightly smaller reduction in Federal Reserve asset purchases later this month, GBP/USD has been able to grow by around 0.7 cents; the Pound is now only 50 pips away from a fresh 7-month high. Federal Reserve policymaker John Williams said that he backs Chairman Ben Bernanke's plan to begin tapering asset purchases at some point this year, before pulling the plug on QE3 during 2014, however, the San Francisco President intimated that he is still unsure over whether to begin the reduction process this month. The irresolute statement did not have a significant impact on GBP/USD.
Canadian Dollar Yesterday it was reported that Canadian Building Permits surged to a 2-year high during July. Rebounding from June's score of -10.6%, the latest print showed a massive improvement of 20.7%. The Canadian Dollar reached a 3-week high against the US Dollar in reaction to the figures, however, the 'Loonie' was unable to carve out any gains against the Pound Sterling.
Australian Dollar In a choppy day of trading the Pound managed to come out on top against the Australian Dollar yesterday by a mild 0.25 cents. The 'Aussie' was supported by strong Japanese GDP and robust Chinese trade figures, which bolstered demand for riskier assets in the region, however, the positive wave of domestic UK data releases over the past few weeks proved sufficient to nullify any attempted Australian Dollar rallies.
New Zealand Dollar Despite Chinese Exports accelerating by 7.2% during August, compared to expectations of just 5.5%, and Japanese GDP printing at an upwardly revised annual rate of 3.8%, substantially higher than previous estimates of 2.6%, the New Zealand Dollar was not able to emulate its performance against the US Dollar – NZD/USD rallied over half a cent due to swelling risk appetite – against the Pound.
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