United States Dollar: The main event on Friday was US non-farm payrolls. It showed that payrolls rose only by 39,000 vs. expectations for a 143,000 rise. The USD weakened as a result and GBP/USD finished the day higher. It eventually traded to a high of 1.5774 and opens the London session this morning at 1.5730. The pound has risen against the greenback despite news over the weekend that The British Chamber of Commerce has revised its 2011 growth forecasts lower as spending cuts look set to take effect over that period. The BCC expects GDP to grow 1.8% in 2010, 1.9% in 2011 and 1.8% in 2012. The overriding focus this week is still likely to be on European peripheral debt concerns and comments, official or otherwise emanating from authorities within the Euro zone.
– We expect a range today in the GBP/USD rate of 1.5620 to 1.5790
Euro: The news has been busily flowing over the weekend regarding the debt problems facing much of the Euro zone. A report in one paper apparently quoted Angela Merkel as threatening to leave the euro. The Guardian reported her stating that if this was the sort of club that the euro is becoming then perhaps Germany should leave. Of course this was dismissed by the German government shortly after but it won”t serve to help support the single currency this morning. Despite this EUR/USD has performed relatively strongly in the last few days, ever since the ECB monetary policy meeting on Thursday. Peripheral spreads have narrowed and the USD is weaker following the NFP data on Friday and this sees EUR/USD open higher than this time last week. It trades at 1.3330 this morning. GBP/EUR is steady this morning and sits at 1.1795.
– We expect a range today in the GBP/EUR rate of 1.1780 to 1.1860
Aussie and Kiwi Dollars: Both AUD/USD and NZD/USD have rallied following the release of the weaker than expected US NFP data. AUD/USD is up from .9800 pre NFP and trades at .9910 currently. AUD/USD rose steadily towards the end part of last week, this despite weak local economic data by way of GDP and retail sales figures released earlier in the week. Risk is back on, although not fully, following the ECB meeting on Thursday and risk currencies have recovered as a result. Similarly NZD/USD is up to .7630 from .7560. The RBA meeting is due later tonight with the central bank expected to leave interest rates on hold. Given the recent run of poor local data however we could be in for a dovish statement, which will be unusual for a central bank that has presided over a robust economy for the last year at least. This means that GBP/AUD and GBP/NZD have both been knocked slightly lower and trade currently at 1.5910 and 2.0650 respectively.
– We expect a range today in the GBP/AUD rate of 1.5810 to 1.6000
– We expect a range today in the GBP/NZD rate of 2.0540 to 2.0720
