Good morning and welcome to today’s foreign exchange market commentary on Friday, the 30th of March.
As the first quarter of 2012 comes to an end, the global financial situation is not much different from the last quarter. Equities are higher, thanks to liberal doses of liquidity by the European Central Bank while oil prices have moved up over Middle East conflict possibilities.
There has been more clarity however, on where the next crisis in Europe will emerge from. The markets thought it would be Italy three months ago, but now the focus is on Spain. The Spanish proposes to cut €35 billion spending that triggered a nationwide general strike yesterday. Yields on Spanish 10-year bonds rose to 5.5 percent yesterday as markets waited for the housing market data for cues.
Back home, the OECD in its semi-annual review said Germany, France and Italy have entered into a technical recession along with the UK, largely due to a dip in Q4 GDP numbers.
German retail sales recorded a sharp fall in Feb; sales dropped by 1.1 percent after adjusting for inflation, indicating Europe’s largest economy is not immune to external shocks.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1981
GBP/US$ – 1.6017
GBP/CHF – 1.4447
GBP/CAN$ – 1.5972
GBP/AUS$ – 1.5395
GBP/ZAR – 12.334
GBP/JPY – 131.64
GBP/HKD – 12.4402
GBP/NZD – 1.9526
GBP/SEK – 10.605
EUR: The single currency started off softly yesterday despite German unemployment data coming in better-than-expected. Italy successfully auctioned 10-year bonds in the morning with yields dropping to August 2011 level on strong demand. However, yields on Portuguese, Spanish and Italian bonds rose sharply after worrying scenes from the Spanish general strike emerged. The EUR/USD bounced back in late trading on hopes of a consensus on the European firewall over the weekend in Copenhagen. The Eurogroup meeting continues to be in focus as the GBP/EUR pair opens at 1.1974 this morning.
USD: The market traded directionless yesterday with most of the currencies, except GBP and JPY easing against the greenback. The pound remained firm against the dollar despite nationwide house price and mortgage approvals data coming softer. GBP/USD traded higher through out the day and touched an intraday high of 1.6032 before settling at 1.6017. There’s not much economic news from the UK though Chicago PMI and University of Michigan confidence numbers are expected from the other side of the pond. The GBP/USD pair softened overnight opens at 1.6004 this morning.
In other news, we will be tweeting from Aplaceinthesun live. Look out for the hashtag #aplaceinthesun
Have a great day!
