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Daily Foreign Exchange Market Update 03/11/2011

Thu, November 03, 2011

The Pound finished yesterday lower against both the Euro and the US Dollar in the foreign exchange market. The GBP/EUR exchange rate closed out at 1.1616; only marginally lower than the morning’s open at 1.1622. The GBP/USD exchange rate though fell far more sharply though, ending the day at 1.5938, down from 1.6021 at the UK market open. The main piece of economic data released from the UK saw October’s PMI construction figure make a surprise increase from 50.1 to 53.9.

Today will see the last of the 3 PMI sectors report, and that will be the services sector. It is almost a dead certainty that there will be an improvement in the figure, as earlier in the week; the 3rd quarter UK GDP figures attributed firm quarterly growth to a sharp rebound in the services sector.

The Euro fell against the US Dollar again in the currency exchange market yesterday, but remained in a very narrow trading range against the Pound. The EUR/USD exchange rate fell from the morning’s open at 1.3785, down to 1.3719 by the end of the UK business day; with the currency not being helped by some disappointing economic data from Europe. The German unemployment rate rose from 6.9% to 7.0%, and the unemployment change for the month rose by 10,000 amid market forecasts for a reduction by the same level. The Euro is sure to come under pressure throughout the rest of the week, amidst the current almost farcial situation in Greece.

The main European market focus will be on the European Central Bank’s interest rate decision today. The rate decision on is probably more anticipated as the first policy meeting without former President Jean-Claude Trichet as opposed to there being any shock announcements, but even so, markets will watch closely for any shifts in bond-buying or rhetoric from the central bank in the post-decision press-conference; especially in regards to any Greek, Italian or Spanish bond purchases.

The US Dollar seems to be benefiting from its safe-haven status in the market now that turmoil in Europe is increasing, after gaining against both the Euro and the Pound yesterday. Markets are becoming increasingly worried about the possibility of a Greek default, or even the nation withdrawing from the Euro currency union; and the risks of debt contagion across the globe are becoming more real. The Federal Reserve’s interest rate decision yesterday sprang no surprises, with the base rate staying at 0.25%, but Chairman Bernanke’s post-decision press conference cast some gloom on the market, confirming that the outlook for economic growth has slowed rapidly, and that the European debt crisis is weighing heavily on the US’s prospects, with the ‘significant downside risks’ to economic growth. Bernanke stated "Unfortunately we can't disassociate ourselves from Europe," he said. "The things that happen there do affect us."

This afternoon will see the release of factory orders figures for September, which are forecast to show a decline, which could put further pressure on the US Dollar, ahead of tomorrow’s all-important non-farm payroll numbers.

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

Data Releases

Day Time Currency Event
THU 09:30 GBP GBP Purchasing Manager Index Services
THU 09:30 GBP GBP Official Reserves (Changes)
THU 12:00 USD USD RBC Consumer Outlook Index
THU 12:30 USD USD Non-Farm Productivity
THU 12:30 USD USD Unit Labor Costs
THU 12:30 USD USD Initial Jobless Claims
THU 12:30 USD USD Continuing Claims
THU 12:45 EUR EUR European Central Bank Rate Decision
THU 13:45 USD USD Bloomberg Consumer Comfort
THU 14:00 USD USD ISM Non-Manufacutring Composite
THU 14:00 USD USD Factory Orders
THU 14:30 USD USD EIA Natural Gas Storage Change

Foreign Exchange Rates

GBP/USD 1.5952
GBP/EUR 1.1576
EUR/USD 1.3776
GBP/JPY 124.37
GBP/CHF 1.4051
GBP/AUD 1.5484
GBP/CAD 1.6172
GBP/NZD 2.0235
GBP/SGD 2.0349
GBP/HKD 12.3651
GBP/CZK 29.050
GBP/PLN 5.0643
GBP/SEK 10.5024
GBP/DKK 8.6135
GBP/NOK 8.9979
GBP/THB 49.07
GBP/ZAR 12.7002

*These are indicative rates only, based on interbank prices at the time of writing. For exact rates please contact our dealing team

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