Good morning and welcome to today’s foreign exchange market commentary on 23rd of July.
Here are MyCurrencyTransfer.com’s top 5 currency highlights:
- GBP/USD trend reversed ahead of Q2 GDP reading
- EUR/USD optimistic on spate of positive economic readings
- Fed continues tightrope strategy on tapering
- JGB Purchases will impact Yen weakness
- Robust economic data from New Zealand boosts NZD
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1630
GBP/USD – 1.5360
GBP/CHF – 1.4375
GBP/CAD – 1.5833
GBP/AUD – 1.6580
GBP/ZAR – 14.8948
GBP/JPY – 153.0958
GBP/HKD – 11.9157
GBP/NZD – 1.9264
GBP/SEK – 9.9172
Mid-market rates as of 2013-07-24 02:59 UTC
Key releases in the next 24 hours that may affect currency date:
Australia: No Data
Europe: EUR Euro-Zone Consumer Confidence (JUL A)
United Kingdom: GBP BBA Loans for House Purchase (JUN)
New Zealand: NZD Trade Balance (New Zealand dollars) (JUN), NZD Balance (YTD) (New Zealand dollars) (JUN), JPY Merchandise Trade Balance Total (Yen) (JUN)
United States of America: USD House Price Index (MoM) (MAY)
China: No Data
Canada: CAD Retail Sales (MoM) (MAY)
Japan: JPY Cabinet Office Monthly Economic Report for July
GBP/USD trend reversed ahead of Q2 GDP reading
GBP/USD reversed the trend established through Monday’s session, slipping against all but the greenback on Tuesday. The surge in the pair has been notable for its consistency and restraint. Markets expected this move considering that the key update in the 2Q GDP reading is due in less than two days’ time. For event risk, home loans reportedly grew to a slower pace than expected although this is not expected to be a game changer when it comes to underlying growth trends. The same is true for tomorrow’s CBI Trends report – a manufacturing survey. Pairs like GBP/USD are expected to find volatility over the coming 24 hours via cross winds from more active pairs, but the pound itself will likely just be along for the ride unless a policy official speaks on a more hawkish policy position.
EUR/USD optimistic on spate of positive economic readings
A number of optimistic forecasts were being produced by different officials and groups over this past session in Europe on Tuesday. The Bank of Spain upgraded its 2Q GDP expectations to 0.1 per cent contraction through the period, while France’s Finance Minister Moscovici asserted the country was “out of recession” in an interview. The Eurozone consumer confidence report for July from this past session posted a -17.4 reading which was the highest in two years and offers hope of a return to growth for the many beleaguered Eurozone members. The real pressure for the EUR/USD pair is expected to come in tomorrow with the region’s PMI figures.
Fed continues tightrope strategy on tapering
Bernanke’s June FOMC post meeting press conference caused a wave of market panic about the Fed’s apparent move to the policy exit. Since then the Fed has been on a communication quest to highlight its views on winding down QE3 purchases whilst seeking not to raise expectations that a sharp snip in rates is around the corner. The Fed is being seen as broadly genuine in this message with rates unlikely to be lifted before early-2015 and then only very gradually.
JGB Purchases will impact Yen weakness
Analysts have indicated that the current situation of JGB purchases will impact the USD/JPY pair. While the pace of monthly JGB purchases has accelerated, a further acceleration could be on the cards later this year if the 2% inflation target remains elusive. The inflation index used for inflation targeting could be a trigger for more aggressive easing. This index remains in negative territory even though the index targeted currently has already climbed to 0% YoY.
Robust economic data from New Zealand boosts NZD
The NZD/USD pair surged above the 0.8000 region following the release of robust economic data in New Zealand. In New Zealand, the Trade Balance (MoM) came in at $414M in June, against expectations of -$100M. Meanwhile, Exports were reported at $4.02B in June, vs. projections $3.90B. Finally, Imports (June) came in at $3.60B, against estimates of $3.90B.
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