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Pound Sterling – The Pound began the week on a positive note after economic data continued to support hopes that the UK economy is making a strong recovery. A better than expected services PMI climbed from 56.9 in June to 57.4 in July.
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Pound Sterling Continued…….
In the first half of Tuesday’s session the Pound was little changed against the US Dollar and Euro. After the release of UK house price data however, Sterling made gains against most of its peers. The data showed that house price rises made their fastest gains in three years, climbing 0.9% on a month-by-month basis. Manufacturing and industrial production figures also trumped estimates.
Wednesday was a volatile day for the markets as the Pound began the session little changed against its peers. By the afternoon however it strengthened by more than 1% against the Euro and leapt to a one-and-a-half month high against the US Dollar after the Bank of England pledged to maintain interest rates at record lows until the UK economy showed signs of a sustained improvement. Sterling then went onto hit a two-month high against the US Dollar during Thursday’s session.
At the end of the week the Pound was close to a seven-week high against the US Dollar due to Wednesdays Bank of England commitment to bringing down inflation and made weekly gains against several other peers.
US Dollar
On Monday the ‘Greenback’ strengthened against the Euro but remained softer against Sterling after data showed that service sector activity in the US grew at a faster than expected rate in July, surging to a five-month high.
Improvement in the Eurozone reduced demand for safe havens leading to the ‘Greenback’ retreating, sending it to a seven-week low against the Euro.
As the week progressed the currency continued to weaken against the Pound and most of its peers after the latest jobless claims data showed that the number of Americans claiming unemployment benefits rose slightly in the week ending on the 3rd of August.
On Friday the ‘Greenback’ held near to a seven-week low against a number of its most traded peers after receiving a kicking due to signs of economic improvement in Europe and China. The currency’s fall is being blamed on the ongoing uncertainty as to when the Federal Reserve will begin to reduce its monetary stimulus programme and the weaker demand for safe haven assets.
The Euro
Monday the Euro had a mixed session after beginning the day positively after several pieces of economic data took economists by surprise by coming in higher than expected. A Sentix survey of investor confidence in the currency bloc surged from -12.6 to -4.9, significantly better than the increase to -10.0 predicted. In the afternoon however the Euro declined after the USA posted better than expected data and fell against the Pound as confidence grew in the UK economy.
The single currency then went beyond a seven-week high after economic data showed that German factory orders increased to their highest level in eight months in June, and GDP data out of Italy showed improvement.
Midweek, the Euro tumbled against the Pound in late trading as the UK currency found support following the BOE inflation report and continuing signs that the country is on track to make a sustained recovery.
As the week ended the currency was trading at a seven-week high against the US Dollar as the single currency found support from further positive data out of Germany.
Australian Dollar
On Monday the ‘Aussie’ fell to a three-year low against the US Dollar and weakened against the majority of its most traded peers. According to the Australian Bureau of Statistics retail sales in the Oceanic country grew at their slowest pace in 51 years over the year leading to June 30th 2013.
Midweek it strengthened against all of its most traded peers after the country’s Central Bank dampened expectations of further interest rate reductions after it cut interest rates to a record low level of 2.5%. The cut is the second one made this year and was forecast by the majority of economists.
As the week came to a close the ‘Aussie’ hit a fresh monthly high against the US Dollar after data showed that imports in China, Australia’s biggest trading partner, increased more-than-expected in July. The better-than-expected Chinese trade data overshadowed weaker Australian employment figures.
New Zealand Dollar
At the start of the week the ‘Kiwi’ tumbled by 1% against the Pound and slipped to its lowest-level in a month against the US Dollar after Russia and China banned imports of milk powder made by New Zealand’s biggest dairy company. The scare was short-lived after the nation’s government said that the country’s economy will not suffer significant harm from the banning of dairy product sales in Russia and China. The currency has also been supported by the rally of its Australian counterpart. The currency ended the week making a 2.1% gain against the US Dollar.
Canadian Dollar
The Canadian market was closed on Monday due to a national holiday but as the markets reopened on Tuesday, the currency made gains after the nation’s trade gap narrowed from 781 million Canadian Dollars in May to 469 million Canadian Dollars in June.
The Canadian Dollar then fell to its lowest-level in almost three-weeks against the US Dollar after the price of crude oil (Canada’s biggest export) fell and as data showed that the number of building permits fell for the first time this year in June.
As the week drew to a close the ‘Loonie’ made gains against the US Dollar and a number of its major currency rivals as better than forecast data out of the Eurozone and Asia boosted demand for riskier assets.
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Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.
The currency round up report is not so impressive. It merely gives the movement in percentages without indicating actual level of each currency vs. US Dollar. A reader has to refer to other market quotes to complement the reading. It wastes lot of time. Make the report more meaningful.
Anil Selarka
Aliso Viejo, CA 92656, USA