United States Dollar: The dollar weakened yesterday on positive news from the EU and the UK. Retail sales in the UK rose by 0.5%, having dropped by the same amount in the previous month. Analysts have mentioned that this trend could provide a much needed boost in consumer spending ahead of the Christmas period, with the Telegraph adding that this may be at the expense of New Year sales suffering. In the US Bernanke has stepped up his defense of the Fed’s latest round of quantitative easing, stating that there are a number of indicators improving, supporting the Fed’s decision. GBP/USD rose from 1.5890 to a high of 1.6080 this morning. We have a few speeches this afternoon from ECB, MPC and Fed officials.
– We expect a range today in the GBP/USD rate of 1.5970 to 1.6120
Euro: Although not officially demand by the Irish government as yet it is likely that Ireland will receive a bailout package to support its ailing banking sector. The package is thought to be in the form of loans from a host of EU countries along with the IMF, with Britain pledging around 7bn in possible loans or guarantees. EUR/USD rose from a low of 1.3540 levels up to 1.3700 this morning.
– We expect a range today in the GBP/EUR rate of 1.1650 to 1.1795
Aussie and Kiwi Dollars: The Aussie managed to hold ground and push further on the back of improved risk sentiment. AUD/USD rallied from an intraday low of 0.9810 to levels above 0.9900 in the early hours of this morning. Chinese inflation is still very much of a concern in the short term, and analysts are likely to be closely watching trade figures for clues as to future Chinese demand. In New Zealand the Kiwi also benefitted from an improvement in risk sentiment, pushing from a low of 0.7705 to levels just shy of 0.7800 this morning. Further improvements in the situation in the EU is also likely to push demand for the high yielders.
– We expect a range today in the GBP/AUD rate of 1.6145 to 1.6345
– We expect a range today in the GBP/NZD rate of 2.0530 to 2.0730
Data Releases:
- AUD: No data of note
- EUR: ECB President Trichet Speaks
- GBP: MPC Member Tucker Speaks
- NZD: No data of note
- USD: Fed Chairman Bernanke Speaks
