Good morning and welcome to today’s foreign exchange market commentary on Monday the 9th of January.
The US economy continues to surprise with robust economic data, thus boosting sentiments globally, except Europe. Unemployment fell to 8 pc from 8.7 pc a month ago and about 200,000 jobs were added. 2012 being an election year, President Obama will indeed be relieved with the latest data. However, the FED may now decide to hit the pause button on further QEs.
This brings us to the EU region and to the GIIPS countries in particular. Already there is a murmur that’s growing stronger that endless austerity measures undertaken in Greece, Ireland, Italy, Portugal and Spain will effectively push these countries in deeper recession. In contrast, labour market and pensions reforms will stimulate long term growth. The combination of tax-hikes and spending cuts are effectively stifling business growth and consumer spending. This is where austerity measures and structural reforms differ. The first pushes the economy down while the latter boosts it.
CURRENCY RATES OVERVIEW
EURO/GBP – 1.2088
US$/GBP – 1.5430
CHF/GBP – 1.4701
CAN$/GBP – 1.5871
AUS$/GBP – 1.5106
ZAR/GBP – 12.5932
JPY/GBP – 118.62
HKD/GBP – 11.98
NZD/GBP – 1.9668
SEK/GBP – 10.6902
AED/GBP – 5.668
US$/EURO – 1.2761
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EUR: The euro continued to lose ground against the greenback due to lack of any political decision from the euro zone. The EUR/USD pair dropped below 1.2700 for the first time since September 2010 on Friday while the GBP/EUR pair touched 1.2163. German Chancellor Merkel and President Sarkozy are due to meet today and all eyes remain on the outcome. German industrial production data is due this morning and a stronger data may support the common currency. The GBP/EUR pair opens at 1.2101 this morning.
USD: The greenback continued its upward journey as strong economic data from the other side of the pond indicates a slow recovery. Non-farm payroll data came at 200k, much stronger than 155k predicted by economists. GBP/USD had hit a high of 1.5525, but slumped to 1.5400 by the day’s close as US job data came in. GBP/USD opens at 1.5440 this morning.
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Have a great day!
