Good morning and welcome to today’s foreign exchange market commentary on Tuesday, the 10th of April.
The global economy is showing signs of nervousness again, though it may be too early to press the panic button. After showing robust job growth over the past few months, US job growth for March dropped to 120,000, lower than the worst forecast. Economists had predicted 200,000 plus job additions and the latest number came as a shocker. Though average monthly job addition remains over 200,000 and one swallow doesn’t make a summer, it may however, force the Federal Reserve to print more money in June if the trend continues in April and May.
Britain has fared better than most of Eurozone and the economy probably grew in Q1 after the shock 0.3 percent contraction in the last quarter of 2011. As inflation refuses to soften, Mervyn King may not be too keen on another round of assets purchase soon. Markit’s recent survey says UK’s services GDP grew about 0.7 percent in the first three months while the overall economy grew by 0.5 percent.
However, March survey for Europe cut a sorry figure with Spain and Italy in deep recession. However, UK manufacturers have reported higher inflation due to a global spike in oil and commodity prices. The global inflation has been partly caused by the Tsunami of liquidity primarily by the US Fed, The European Central Bank, the Bank of Japan, and the BoE.
The Euro has held above 80 pence since 2009 but may drop below the mark as the ECB is likely to carry on with its loose monetary policy for some time in future despite German opposition. The pound may not gain against the dollar however, as investors typically prefer the greenback over the cable in the face of a crisis.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.2118
GBP/US$ – 1.5882
GBP/CHF – 1.4568
GBP/CAN$ – 1.5826
GBP/AUS$ – 1.5436
GBP/ZAR – 12.492
GBP/JPY – 129.12
GBP/HKD – 12.3278
GBP/NZD – 1.9357
GBP/SEK – 10.732
EUR: The single currency remained weak against the greenback and the pound on Monday, unable to make any headway following Friday’s sell off. The EUR/USD pair had hit an intraday high of 1.3130 but mostly remained range bound otherwise and traded in 1.3050-1.3075 band. The GBP/EUR pair hit an afternoon high of 1.2152 before settling lower at 1.2110 as stops were triggered in EUE/USD. There’s no major data due from the EU region today and the GBP/EUR pair opens at 1.2114 this morning.
USD: The greenback remained under pressure on Monday after poor nonfarm payrolls report on Friday. The GBP/USD pair breached the 1.5914 level on Monday, ahead of Fed chairman Ben Bernanke’s speech as investor’s expected dovish QE3 chatter. The RICS house price survey for
March has come in better than expected; still the GBP/USD pair struggled to move higher as the market seems to be in a sell rallies mode. With no major data expected today, the Pound may continue to count losses today. The GBP/USD pair opens at 1.5872 this morning.
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Have a great day!
