United States Dollar: The pound fell again on Wednesday. It eventually fell to a low of 1.5360 against the US dollar after UK current account data, released yesterday came in worse than expected. Figures showed that the deficit increased to £9.6 billion vs. forecasts for – £8.1 billion. Political wrangling and the stability of the UK coalition government being brought into question by the opposition hasn’t helped the pound’s cause either. GBP/USD has recovered overnight however and opens the morning at 1.5385. This comes following BOE Markets Director Paul Fishers comments to the Daily Telegraph that he expected UK interest rates would head back to a normalised position of 5% over time. It follows MPC minutes released yesterday which again showed a split vote. Posen voted for an increase in QE, Sentance voted for a rate hike and the rest voted for no change to either. This did not surprise the market. Meanwhile US existing homes sales were released yesterday but failed to have any impact on GBP/USD coming in close to expectations.
– We expect a range today in the GBP/USD rate of 1.5320 to 1.5440
Euro: EUR/USD fell from 1.3160 to 1.3080 yesterday. Debt concerns of course linger on and will continue to weigh heavy on the currency for a while yet. The ECB is lending European banks EUR 149.5 billion to meet liquidity requirements by year end but markets are convinced that they need more which is also a Euro negative. EUR/USD has recovered off of its lows throughout the Asia session however and opens this morning at 1.3100, not much higher but it did touch on 1.3150 last night. This comes after Euro supportive comments from China. The Chinese Foreign Ministry reiterated its support for the EU and an IMF bailout package and confirmed that the Eurozone is still one of the most important areas for its forex investment. GBP/EUR is pretty steady this morning and trades at 1.1750.
– We expect a range today in the GBP/EUR rate of 1.1720 to 1.1810
Aussie and Kiwi Dollars: AUD/USD has climbed back through parity overnight buoyed by Euro positive comments from China. Local stocks have also performed pretty well in Sydney whilst commodity prices remain firm. The positive risk sentiment means AUD/USD opens this morning at 1.0040. NZD/USD is also higher this morning compared to opening levels yesterday. It trades at .7450, this coming despite NZ GDP data showing that the countrys economy unexpectedly contracted in the third quarter. GDP fell 0.2% over this period vs. forecasts for a 0.1% rise. The reason was put down to the impact of the South Island earthquake earlier in the year. Markets have just found themselves a little short the Kiwi in the run up to the holiday period. Both GBP/AUD and GBP/NZD have declined further overnight and open this morning at 1.5325 and 2.0635 respectively.
– We expect a range today in the GBP/AUD rate of 1.5260 to 1.5400
– We expect a range today in the GBP/NZD rate of 2.0580 to 2.0720
