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 Manufacturing PMI hits 2.5-yr high – New Orders surge most in 19 years.
• Eurozone Manufacturing touches 26-month high – recovery spreading through Europe.
• GBP/CAD on the up – USD saves face vs. Sterling.
• Chinese PMI spurs risk appetite – Syrian intervention pushed down the road.
Sterling The Pound received a sizeable boost yesterday as the latest UK Manufacturing PMI print came in at a fresh 2.5-year high. Accelerating from 54.8 in July, August's Purchasing Managers Index printed at 57.2. The robust report was especially positive in that it featured the largest jump in New Orders and Output since 1994 – when the financial crisis had not even begun to form yet and Bank of England Governor Mark Carney was still an employee at Goldman Sachs. Sterling was also supported by news that Vodafone sold its 45% stake in the American wireless communications company Verizon. The deal, reported to be worth around $130 billion, is the third largest corporate contract ever and should see a big chunk of cash flowing into the British Isles. Some traders opted to piggyback onto the Sterling inflows and this led to a bout of strength for the Pound. Euro The Pound to Euro exchange rate rallied by around 0.6 cents yesterday, striking a fresh 2-month high in the process. Sterling's gains came as UK Manufacturing massively outperformed its European counterpart. However, the 17-nation bloc's Manufacturing PMI report was far from disappointing: output expanded by the most since 2011. The Eurozone factory output figure came in at 51.4, marginally higher-than-expected, as the tentative recovery continued to take shape during August. Many peripheral European states hit multi-month and even multi-year highs as demand picked up on a local and global scale. The relatively encouraging nature of this report suggests that Manufacturing will continue forward in the right direction during September. Following a heated television debate between German Chancellor Angela Merkel, of the Christian Democratic Union, and challenger Peer Steinbrück of the Social Democratic Party, Merkel's stranglehold over the Eurozone's flagship economy became a little less secure. Polling data shows that Merkel's support dropped from 54% to 48% after the debate, whilst Steinbrück's surged from 28% to 45%. Exactly what this means for the Euro is uncertain because although Merkel is known for her tough stance on austerity – which many feel is exacerbating the debt crisis – her stable presence is seen by markets as a positive driver for growth in Germany. US Dollar Markets in the States were closed yesterday for Labour Day, or as they spell it 'Labor Day'. It's basically the American version of May Day – to celebrate workers' rights – but fortunately for financial markets the other definition of Mayday – a distress signal – was not sounded during a relatively average day of trading. GBP/USD initially rallied by just over half a cent as investors bought into Sterling on the back of August's glittering Manufacturing PMI result, but support for the Pound receded during the afternoon as a combination of Fed taper and Syrian conflict speculation led to enhanced demand for the world's premier safe haven currency.
Canadian Dollar Sterling rallied closer towards another 3-year high against the Canadian Dollar yesterday in reaction to the impressive British Manufacturing report for August. GBP/CAD strengthened by around 0.6 cents but still remains a cent below the multi-year peak touched on August 23rd. Later on this week the Bank of Canada is due to release its interest rate target for September, but little volatility is expected as the current rate of 1.00% is almost certain to be maintained.
Australian Dollar During the early hours of the morning yesterday, when most British investors were asleep but Asian trading was at its peak, it was announced that Chinese Manufacturing returned to growth in August. The HSBC report confirmed what the official government survey showed a week earlier: that factory output rebounded to 50.1 last month. The encouraging print gave rise to a fresh bout of risk appetite and this helped the 'Aussie' Dollar to post a one-cent daily gain against the Pound.
New Zealand Dollar The decent Chinese data combined with an easing of Syrian conflict worries allowed the New Zealand Dollar to register gains in excess of 1.5 cents against Sterling yesterday. Risk appetite picked up slightly as US President Barack Obama said that he would take his proposal for military action in Syria to Congress, on September 9th, before going ahead with the intervention. 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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