The Euro managed to appreciate by around 0.4 cents against the Pound.
Please find below today’s update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements.
• Slow day for markets – activity reaches Bank Holiday-like lows.
• Germany hint at problems in Greece – “No reform, no payment”.
• Low market volatility – could damage USD.
• Negative core EZ bond yields – German and French yields fall.
With the games over and done with, cafes are once again permitted to sell ‘Olympic Breakfasts’ and ‘Nescafe Gold Blend coffees’ without the threat of Olympics Legacy Ambassador Lord Sebastian Coe, or the Olympic Delivery Authority (ODA) imposing fines of up to £20,000. It seemed that in their haste to fill up on oversized breakfasts and cheap coffee, traders were unable to purchase stocks which sent SP 500 volumes down to levels not seen, apart from during Bank Holidays, for over 5 years.
Subsequently yesterday was relatively quiet for Sterling with the Pound gaining 0.2 cents against the US Dollar, 0.3 cents against the Canadian Dollar, 0.6 cents against the Australian Dollar and 0.8 cents against the New Zealand Dollar. The Sterling to Euro exchange declined by -0.4 cents.
Political fissures between Greece and Germany continue to undermine the Hellenic state’s hopes of economic revival. Yesterday Angela Merkel’s deputy leader, Michael Fuchs, told reporters in Germany that Athens must meet all of its economic targets in order to receive further aid packages:
“You can quote me: even if the glass is half-full, that is not enough for a new aid package… Germany cannot and will not agree to that.”
Fuch’s comments were echoed by the German Economy Minister, Philipp Rosler, who intimated to journalists that his faith was fast fading:
“I’ve lost my illusions over Greece’s ability to change.”
The conflicts emerged as it was announced that Greece’s economy shrank by an incredibly damaging -6.2% during the second quarter of 2012 on an annual basis. The data marked the fifth consecutive three-month period of negative growth of below -5.0%.
Despite the ongoing war of words within the currency bloc, the Euro managed to appreciate by around 0.4 cents against the Pound yesterday as the Greek GDP results were actually slightly better than economists had predicted. The single currency was also given a boost as high demand from investors sent bond yields on French 4-month debt and German 6-month debt into the negative territory.
With markets appearing to be suffering from an Olympic hangover, the slowdown in global growth this week could knock the US down from the podium. With an impressive 46 gold medals the US Olympic team were comprehensive winners at the London games, but the US Dollar could be set to decline over the next few days as stock market activity falls close to levels that are usually associated with national holidays such as Christmas, Easter, or Thanksgiving.
Whilst the US Dollar usually benefits from defensive inflows during times of low market confidence, the ‘Buck’ can be left at a disadvantage when market volatility is low as it can freeze-up liquidity flows into the US currency. Yesterday the Pound managed to post a modest daily gain of around 0.2 cents against the US Dollar as the ‘Greenback’ also lost out on 0.3 cents to the Euro.
The Australian Dollar lost out on around 0.6 cents against the Pound yesterday as outlook for the Antipodean currency continued to dampen in response to deteriorating global growth prospects. With the Chinese economy appearing to cool, and Reserve Bank of Australia Governor, Glenn Stevens, commenting on the negative affect of a strong Australian Dollar on the country’s exports, it seems likely that Central Bank rhetoric will swing towards a dovish bias for the remainder of the year.
New Zealand Dollar
The Pound to New Zealand Dollar exchange rate reached a 2-week high of 1.9428 yesterday as weak Japanese growth figures drained investors’ appetite for risk in the area. Japanese GDP grew by only 0.3% – half the expected amount – on a quarterly basis during Q2, and the annual figure dropped from 5.5% to 1.4% which sent the high-yielding ‘Kiwi’ Dollar lower against the Pound.
Sterling rallied to a 5-day high of 1.5607 yesterday against the Canadian Dollar as sentiment surrounding the ‘Loonie’ continued to weaken following last Friday’s soft Canadian Employment report. However tensions in the Middle East between Israel and Iran sent the price of Brent crude oil to a 3-month high which allowed the Canadian Dollar to claw back some of its losses, as oil is one of the country’s most lucrative exports.
Data Released Today
06:00 EUR German Gross Domestic Product s.a. (QoQ) (2Q P)
08:30 GBP Consumer Price Index (YoY) (JUL)
09:00 EUR Euro-Zone Gross Domestic Product s.a. (QoQ) (2Q A)
09:00 EUR German ZEW Survey (Economic Sentiment) (AUG)
12:30 USD Advance Retail Sales (JUL)
- Pound to US Dollar Exchange Rate Forecast: The Pound managed to shrug-off an appalling second quarter GDP print to post gains of around 2 cents against the US Dollar
- Pound to Euro, US Dollar exchange rate: The Pound to Euro exchange rate reached the highest level since October 2008
- Pound to Euro, US Dollar exchange rate: Sterling loses out to high-beta currencies
- Pound to Euro, US Dollar exchange rate: Sterling posts gains against the Euro
- Pound to Euro, US Dollar exchange rate: Following the dismal GDP print the Pound lost ground to all of its major currency peers