By Sayan Guha
Good morning and welcome to today’s foreign exchange market commentary on Thursday, the 8th of March.
So the day of reckoning for Greece has come. Negotiations that have gone on for more than six months now run the risk of getting aground, courtesy, Greek pensions funds. The so-called private-sector initiative deadline ends at 2000 GMT today. Late last night, more than half of Greek bond-holders confirmed their participation in the debt swap in an attempt to calm investors.
Athens would ideally like to see no less than 90 percent private creditors take part, and has announced less than 75 percent participation is not acceptable. The Institute of International Finance, representing the leading global banks that hold Greek assets, released the list of banks that have confirmed participation.
The Bank of England and the European Central Bank are also due to hold their policy meetings today. Three years ago on a similar day like today, the BoE had lowered interest rates to 0.5 percent to boost growth. The status-quo still holds and is unlikely to change soon. Though recent UK numbers have been better, choppiness still remains. Don’t be surprised if another round of QE is announced in May since the European crisis will continue to weigh on the British economy for some time in future.
However, today’s most anticipated economic number is due from the other side of the pond. US initial jobless claims will come in at 13.30. Yesterday’s ADP private sector hiring numbers came in stronger at 216k.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1962
GBP/US$ – 1.5761
GBP/CHF – 1.4434
GBP/CAN$ – 1.5699
GBP/AUS$ – 1.4855
GBP/ZAR – 11.9387
GBP/JPY – 128.227
GBP/HKD – 12.2384
GBP/NZD – 1.9201
GBP/SEK – 10.6750
EURO: The Greek uncertainty continues to weigh the single currency down. An unexpected fall in factory orders in Germany due to slump in foreign demands didn’t help the euro either. The single currency however, didn’t lose much ground after the release as markets remained focused on the Greek debt swap deal. Euro is likely to gain as we inch towards a deal. The EUR/USD opened at 1.3215 this morning while the GBP/EUR is hovering around 1.1969.
USD: The cable has pushed ahead against the greenback as there’s an optimism surrounding the debt swap today. Sterling started to move against the USD following strong employment numbers in the US. The UK is also due for bank rate and official asset purchase decision today, which are expected to remain unchanged today. The GBP/USD pair opens above 1.5800 this morning.
Have a great day!
