Daily Foreign Exchange Market Update

Fri, February 10, 2012

The Pound finished slightly lower against the US Dollar and flat against the Euro in the foreign exchange market yesterday. The GBP/EUR exchange rate picked up from 1.1912 at the morning’s open to trade up to the days high of 1.1994 before trading back down to 1.1912 by the close of the UK business day. The GBP/USD exchange rate traded within a tight range of 1.5885 and 1.5817 and with the pair marginally lower from 1.5838 at the day’s open to 1.5836 at the European market close. The Pound also finished slightly lower against the New Zealand Dollar and gained slightly against the Australian Dollar flat against the Euro in the foreign exchange market. The GBP/NZD exchange rate picked up from 1.8937 at the morning’s open to trade up to the days high of 1.9034 before trading back down to 1.8923 by the close of the UK business day. The GBP/NZD exchange rate opened up from 1.4646 to trade up to 1.4657.

Yesterday we had quite significant data from the UK with Industrial and Manufacturing Production coming in better than expected. UK Industrial Production m/m came in at 0.5% vs. -0.5% from the prior month and Manufacturing Production m/m increased to 1.0% vs. -1.0% the prior month of December. The UK also recorded the smallest trade deficit since April 2003 with the Visible Trade Balance coming in at -£7111 vs. -£8908 expected by economists. Also as expected the Bank of England also increased their Asset Purchase Target to £325bln from £275bln.

This morning we have seen good figures from the UK, with Producer Price Index n.s.a. y/y (Jan) caming in higher than expected at 7.0 vs. 6.8% and the m/m figure increased from -0.6% to 0.5% from the prior month of January. There is no more scheduled data from the UK today.

The Euro closed flat against the pound and the US Dollar in the currency exchange market yesterday. The EUR/USD exchange opened up at 1.3296 to trade up to the day high of 1.3322 before closing out at 1.3296 by the European market close. Yesterday the ECB kept the rates unchanged at 1.00% however Mario Draghi said the governing council did not discuss a rate change.

This morning from the Euro-zone, German Consumer Price Index y/y was inline with expectations at 2.3% vs. 2.3%. The French Industrial and Manufacturing Production have come in weaker than expected, with Industrial Production y/y was down at -1.3% from 1.1% and Manufacturing Production y/y came in lower at 0.8% vs. 2.5% preciously. Italian Industrial production also declined y/y from -4.1% to -7.7%.

The US Dollar gained marginally against the Pound and flat against the Euro currencies yesterday. Economic data from the US was fairly mixed yesterday with better than expected US Initial Jobless claims coming in at 358k vs. 370 expected by economists; however Continuing Claims for January 28^th was higher at 3515k vs. 3505k.

Today from the US we will look out for the 13:30 GMT US Trade Balance for the month of December and 14:55 GMT University of Michigan Confidence expected to decline from 75.0 to 74.0 by economists.

This Daily Market Update is brought to you by The Market Team @ KBRFX – Exchange Rate, Currency Conversion & Foreign Currency Transfer specialists.

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