Currency Update – Wednesday 30th July

Currency Update – Wednesday 30th July

Yesterday, despite a prompt and rainy end, to the recent spell of real summer weather we saw a few tentative signs of optimism within the Markets. US Consumer confidence managed an improvement on June's 16 Year low, with inflation concerns having receded, probably on the back of a recent fall back in Oil and energy Prices.

The figures showed the first rise in Confidence since Decembe, and this improved the mood in both equity markets and in the USDollar. News that major US Bank Merrill Lynch, was writing down a further USD5.7 BN against its US mortgage exposure also lifted sentiment, as operators believed that it removed future uncertainty and would enable the Bank to turn the corner.

The Dollar made solid gains against the Euro, trading  up to $1.5600 and against the Pound. Sterling suffered modest falls through the afternoon and closed just above the USD1.9800 handle, with  a further fall in UK Retail Sales in July and another record low figure for new mortgage approvals, continuing the tone of downbeat data, that has prevailed of late.

The Pound faired better against the Euro, ending the day at EUR 1.2700 from a low of EUR 1.2630 ;  Yesterdays Price data from Germany raised the prospect of further rate rises from the ECB.
Worried investors sold Euros as they feared this would hurt ,an already struggling economy. French Consumer Confidence added to Euro Gloom with another record low.

Overnight has seen a further fall in the oil price , which continues to lend the USDollar support.  Crude fell a further four Dollars to a low of USD120.42, before settling at USD121.92, after OPEC President Khelil, suggested that oil, could fall as low as USD 80.00 in the long term, should Geopolitical anxieties ease and the USDollar remain strong.
Down under, the AUD and NZD have continued, in their recent, weaker vein, with an article in the UK Times, highlighting how the World's financial storm, is now sweeping through the Pacific region.
Both Equity markets and currencies have fallen sharply, as Commodity prices ease and Confidence falls. Aussie Dollar Falls by 4 Cents, in a week, Versus GBP 

Its another low key data day in the UK and the Eurozone, with only a couple of minor consumer and business confidence surveys released in Europe; In the US later, we get the latest MBA Mortgage applications and ADP Employment numbers , neither of which should be sufficient, to interfere with the current trend for a stronger Greenback.

Jon Palmer | Treasury Solutions | nabCapital

No Comments

Post a Comment