Daily Foreign Exchange Market Update 15/11/2011

Tue, November 15, 2011

The Pound finished yesterday higher against the Euro, but having fallen lower against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate picked up across the day, and finished the UK business day trading at 1.1670, up from the morning’s open at 1.1648. The GBP/USD exchange rate however slipped lower, from 1.5997 at the morning’s open; to trade down at 1.5898 by the UK market close. There was no significant economic data released from the UK yesterday, with the Dollar’s gain being attributed to shifts in sentiment in regards to the ongoing Italian and Greek debt situation.

This morning will see key CPI (inflation) figures released from the UK. The market expectation is for inflation to have fallen both annually and month-on-month; which would be welcomed both by consumers and the Bank of England, as the last thing needed at the moment for the UK economy is increased price pressures.

The Euro fell against both the Pound and the US Dollar in the currency exchange market yesterday. The EUR/USD exchange rate fell sharply across the day from 1.3725 at the morning’s open, to trade down at 1.3622 by the UK market close. The currency was no helped by disappointing figures released yesterday, with Euro-zone industrial production falling heavily, from 6.0% to 2.2% annually, and from 1.4% to -2.0% month-on-month.

The market is very wary at present of the direction that will be taken by the new Italian government under recently appointed Prime Minister Mario Monti; and this is weighing on the Euro currency. With the nation’s current debt to GDP ratio standing at a whopping 120%, there will need to be harsh measures implemented very soon to prevent the country imploding. There have been disappointing figures released this morning, with German 3^rd quarter GDP showing an annual slowdown from 3.0% to 2.5% (n.s.a figure) and from 2.9% to 2.6% (w.d.a figure), but quarterly there was a small improvement in growth, from 0.3% to 0.5%. Later on today we will see Euro-zone 3^rd quarter GDP figures cross the wires, along with Euro-zone and German ZEW economic sentiment survey results.

The US Dollar returned to benefitting from its ‘safe-haven’ status in the currency markets yesterday, gaining against both the Euro and the Pound throughout the course of the day. With worries over the way forward for both Italy and Greece, the Greenback gained over a cent against both its major counterparts. With no economic data of note released from the US yesterday, the gain can only be attributed to shifts in risk sentiment.

Today will see October’s advance retail sales numbers cross the wires, with the market forecast for a slowdown from 1.1% to around 0.3%; which would not be positive for the US; but with tightening consumer conditions, and fears of debt contagion across the market, it is almost certain that we will see a negative result, so there may not be too much reaction in the market.  

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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