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Euro Drops Versus Dollar On Greek Troubles

The pound remained relatively flat versus the European single currency after retail sales report released this morning showed signs of improvement in UK retail sector. The headline gauge came out in line with expectations at 0.6%, following a –0.4% decline in November. However, the gain in consumer demand may not be maintained in coming months as UK unemployment rises and consumer confidence falls. Separately, Prime Minister David Cameron  said yesterday that the UK lost faith in free market capitalism, amid growing sense that the burden of economic adjustment was being unfairly shouldered by the less well-off,  and proposed creating an era of popular capitalism. 

The euro declined against the dollar during the early morning session as Greek government and private creditors struggle to reach agreement on a debt swap plan. However, the single currency is still trading  at a reasonably good levels after Spain and France successfully auctioned government debt yesterday, in their first bond sale since being downgraded by Standard & Poor’s last week. Expect for the single currency to remain volatile as Greek fiscal troubles continue to stir the markets. 

The dollar consolidated against most of its rivals during the overnight trade after jobless claims last week dropped to the lowest level in almost four years, driving investors from dollar safety. Application for unemployment dropped to 50K from 352K in the week ended January 14, the best reading since April 2008. Although week to week reading tends to be volatile, the boost in jobless claims figures in recent weeks are clearly pointing to improvement in US job market sector. Looking ahead to today, Existing Home sales for December headline the economic calendar, with expectations for the figures to have increased by 5.2% to a 4.65 million annual rate.

 

 

Pound Drops Before Unemployment Release

The pound consolidated against its major rivals during the overnight trade before labour statistic data is released today at  9:30. The unemployment gauge is expected to have remained unchanged at 8.3% in November,  while claimant count are expected to have increased by 7.0K in December.  Also scheduled for today is weakly earnings release, with expectations for the figures to have increased by 2.0% in November. Separately, Bank of England policy member, Adam Posen, said in a speech yesterday that the concerns of the increased inflation in near future are “unfounded”. He said that the challenge actually will be to keep “inflation expectations anchored in the face of real rather than nominal volatility”. 

The euro remained supported against its major rivals for a second day in a row on speculation the Greek government is nearing a deal on its debt. Greece will resume talks today  with the Institute of International Finance (IIF), which represents private creditors in Greek government bonds. The IIF broke off the negotiations last week after failing to determine how much money investors will lose by swapping their bonds. Regardless of the outcome of the negotiations, the Fitch Ratings said that Greece will fail to fully honor bond payment, adding to concern that first sovereign default would further undermine single currency. With light economic calendar scheduled for today, market attention will remain focused on the periphery of the Eurozone, as Portugal is auctioning government bonds today. 

The dollar consolidated during the Asian session after the report showed that manufacturing in New York region expanded at the fastest rate in nine months, boosting demand for higher yielding assets. The Fed’s NY manufacturing index rose to 13.5 from revised 8.2 in December. Looking ahead to today, industrial production release headline the economic calendar, with the expectations for the numbers to have increased by 0.5% in December after dropping by -0.2% in the prior month. Expect for the dollar to remain in current ranges as world’s largest economy is showing further signs of recovery.

 

 

Euro Drops After S&P Cut French Credit Rating

The pound is mixed this morning, gaining against the broadly weaker euro, but consolidating against the dollar after Rightmove said the UK House prices decreased in January. Britain's home sellers cut asking prices for a third month in January, pushing the average asking price by  0.8% from December to 224,060 pounds. Sterling however, gained more than 1% against the euro after Standard & Poor’s rating agency downgraded nine European nations. There are no economic releases or policy speeches scheduled for today. Looking to the week ahead, inflation report and labour market data headline the economic calendar. On Tuesday ONS publishes consumer price inflation data for December, with the expectation for the inflation to have fallen to 4.2% after reaching 4.8%  in previous reading. On Wednesday, we receive unemployment data, and the market consensus is calling for the ILO unemployment rate for November to have remained unchanged at 8.3% , and the December’s claimant count to have increased by 7.0K. Finally, retail sales data for December are published on Friday, with projections for figures to have reported growth of 0.6%. 

The euro slumped across the board during the weekend after S&P rating agency downgraded top grades of France and Austria by one notch to AA+, while affirming the top ratings of Germany and Netherlands. The agency also downgraded Italy, Portugal, Spain and three other Eurozone member states. The larger euro downward trend was avoided after the European Central Bank announced it will purchase Italian and Spanish debt in order to calm the markets. Separately, traders are turning their attention to Greece this week as Greek government and its crediting partners are seeking a way to reach agreement as country is facing danger of sovereign default. 

The dollar gained across the board during Asian session as debt crisis in Eurozone pushed investors into safety of the US currency. The global stock markets consolidates as fears intensified that everything isn’t right in the Eurozone. Looking to the week ahead, Empire Manufacturing, Industrial Production figures and December inflation report headline the economic calendar in the US. Expect for the greenback to trade in tight ranges today, as US is closed for the Martin Luther King Jr. public holiday.

 

 

Pound Drops Before BoE Meeting

The pound dropped across the board during the overnight trade before Bank of England officials meet at their first monthly meeting of the year. It is broadly expected for the Monetary Policy Committee (MPC) to make no changes, with base interest rate held at 0.5% and the stock of asset purchases left at 275 billion pounds. However, the pressure on the central bank to loosen the policy remains as economic recovery stalls, and we believe that the MPC will announce further expansion of quantitative easing in February. Also scheduled for today are the manufacturing and industrial production data for November. The manufacturing gauge is expected to have fallen by –0.2% after dropping –0.7% in the previous month. In addition, the industrial production is also expected to have fallen by –0.2% from –0.7% in October. Expect for the pound to remain volatile before central bankers meet at noon today. 

The euro is higher against its major counterparts this morning before European Central Bank policymakers meet today and announce monetary policy decision. Market participants believe that the central bank officials won’t make any additional steps to support the economic growth at their meeting in Frankfurt today. The bank’s benchmark interest rate sits at 1%,  after policymakers cut the interest rate by 0.25% at two previous meetings. However, the single currency sentiment remains negative before Spain and Italy auction 17 billion euro of bonds today. Also scheduled for today is  the Eurozone industrial production data, with the expectations for the figures to have shrank by –0.3% in November.

The dollar is higher against the broadly weaker pound, but consolidated slightly versus the euro as investors focus on ECB meeting and bond auctions in Italy and Spain. The greenback enjoyed quite a positive ride in recent days as uncertainty drove the investors into safety of the US currency. Looking ahead to today, Retail sales figures and Monthly Budget Statement  for December  headline the economic calendar. Expect for the retail sales figures to increase in December as US retailers were supported by holiday discounts. 

 

 

Euro Supported After German GDP Release

The pound remained relatively flat during the overnight trade before Bank of England officials gather tomorrow on regular monthly meeting. Market participants will pay close attention on the quantitative easing decision, especially after British Chamber of Commerce said that additional BoE stimulus may not be enough to revive anemic economic growth in UK. Separately, Fitch Ratings announced yesterday that they will review the UK credit rating in the first half of the year, but said that they do not plan to change the rating at this point in time. Looking ahead to today, ONS (Office for National Statistics) will release trade data for November, with the expectations for the visible trade balance to have widened to 8.4 billion pounds, due to the unexpected jump in trade balance seen in October. 

The euro regained some of its value against the dollar and the yen after a report showed German gross domestic product rose 3% last year. The single currency found support after Federal Statistics gauge said Germany’s economy expanded 3% in 2011, after a 3.7% advance in 2010, matching the economist estimates for Europe’s largest economy. However, the German economy probably contracted in the final quarter of 2011 as sovereign debt crisis hampered the country’s exports. The first reports are saying that German economy shrank by -0.25% in fourth quarter. Expect for the single currency to remain supported only for the short period of time as debt crisis in the Eurozone is expected to spoil the trend for the currency. 

The dollar  consolidated within its recent ranges during the Asian session as world stocks go up and as confidence in US economy grows, damping demand for dollar’s safe haven appeal. Also supporting the global stocks rally was the speculation that China will tweak its monetary policy in near future in order to encourage growth. Looking ahead to today, Fed’s Beige book and MBA Mortgage Applications headline the economic calendar in US hours.  

 

 

Pound Little Changed After Housing Report

The pound was quiet during the overnight trade after RICS survey showed the UK housing market remained under pressure in December. Although the headline figure came out better than expected,  printing –16 from –17 in November (consensus: -19), the reading is still extremely low by historical standards as the property market face challenges from deteriorating economy. Sterling came under pressure after the British Chamber of Commerce said that more Bank of England stimulus may not be enough to revive UK economic growth. Also released during the overnight trade was the BRC (British Retail Consortium) release, reporting that UK retail sales grew strongly in December. The headline figure showed that total sales in value terms increased by 4.1% up from 0.7%  in November.  With empty economic calendar scheduled for the remainder of the day, expect the pound to remain in current ranges before BoE officials meet later in the week. 

The euro dropped against most of its major rivals before several countries within the single region auction debt sales this week. Also, Greek PM Lucas Papademos is seeking to form an outline for a 100 billion debt restructuring plan next week, ahead of the talks with EU and IMF about the terms of second round of financial support.  On the economic docket, French Manufacturing and Industrial Production figures came out today, beating the expectations but still legging from November reading. The manufacturing gauge came out at 2.2% in December, from 2.6% in the previous month, beating the analyst expectations of a -0.1% contraction.

 

 

Pound Up Versus Euro On Debt Concerns

The pound is mixed this morning, consolidating against the broadly stronger dollar, but gaining against the euro as region’s major economies face troubles in auctioning government debt. Also supporting the pound was the better  than expected PMI services report, which expanded to 54.0 from 52.1 in November, beating the expectations of 51.5 reading. Expect for the pound to remain supported against the euro as Eurozone countries remain under pressure as debt crisis intensifies. 

The euro dropped across the board during the overnight trade after Greek Prime Minister Lucas Papademos warned that his country may face economic collapse by mid March. Mr. Papademos warned that deeper cuts in incomes are the only way Greece can remain in the euro area and receive additional financial aid package scheduled for March. Separately, France is auctioning 8 billion euro of  government debt today, and after yesterday’s weaker than expected German bond sale the single currency came under additional pressure. 

The dollar gained during the Asian session as investors run for safety of the US currency debt crisis in Eurozone looms and before US releases its services figures. ISM Non-Manufacturing gauge is expected to have expanded to 53.0 in December after reaching 52.0 in the previous reading.  Expect for the greenback to remain supported as uncertainty in the markets drive investors into safety of the US currency. 

 

 

Dollar Consolidates On Recovery Signs

The pound is higher against the dollar and the euro before December construction report is released today at 9:30. The PMI gauge is expected to consolidated to 51.5 from 52.3 in November, but still remaining above 50 benchmark. Separately, Bank of England publishes its landing data for November, with expectations for net consumer credit of 0.2 billion pounds, and  mortgage lending of 0.8 billion pounds. Expect for the sterling to remain in current levels as markets remains driven by the events in the Eurozone. 

The euro gained against the dollar during the overnight session, but stays under pressure against the pound as services and manufacturing reports showed that single region economy contracted for the fourth month in December. The PMI services final reading was better than economist forecasted at 48.8 from 48.3 in November, however any reading below 50 mark indicates contraction in the sector. The euro also came under pressure against sterling as Germany and Portugal prepare to auction 6 billion euro in debt. The single currency though found some support yesterday after EFSF (European Financial Stability Facility) announced it plans to raise  3 billion euros from bond auction to help finance bailouts in Ireland and Portugal. 

The dollar consolidated during the Asian session after report showed that US manufacturing gauge expanded in December at the fastest pace in six months. The ISM (Institute for Supply Management) factory index climbed to 53.9 in December from 52.7 in November. The greenback snapped its gaining streak from 2011 as latest reports suggest that economies around the globe show some life signs at the start of the year. Federal Reserve Minutes released yesterday revealed that the central bank officials will start announcing their own predictions for the bank’s interest rate in the future.

 

 

Pound Strong Versus Euro After Better Than Expected Manufacturing Data

The pound remained strong against the euro after report showed that UK manufacturing shrank less than economist projected in December. A gauge of factory output rose to 49.6, beating the estimates of a drop to 47.3 from a revised 47.7 reading in November. However, this reading is far from positive as any reading below 50 indicates contraction in the sector. The debt crisis in the Eurozone, the UK’s largest export market, has worsen the outlook for manufacturers, and the Bank of England has indicated the UK economy may have stagnated. There are no other major economic releases or public speeches scheduled for today. Looking to the week ahead, we receive the construction and services PMI reports for December. We expect the construction PMI to fall to 51.8 from 52.3 in previous reading, while the services gauge is expected to fall to 51.5 from 52.1 in November. Expect for the pound to remain supported versus struggling euro as European leaders start the year in fear of preserving the single currency. 

The euro gained against the broadly weaker dollar during the overnight trade, but remained subdued against the pound on concern the Eurozone debt crisis will hurt the economic growth in the region. The single currency found some support during early morning session after German Unemployment figures fell more than economists predicted in December. The number of people out of work fell to 2.89 million, pushing the jobless rate to 6.8% from 6.9% in November. Looking to the weak ahead,  European manufacturing and services output headlines the economic calendar, with the expectations for the figures to shrank in December. 

The dollar dropped during the Asian session after reports showed PMI manufacturing in China expanded more than expected in December , and investors dumped the dollar and went into so called  “riskier assets”. Federal Reserve Minutes release and ISM Manufacturing report are due out today, with the expectations for the  manufacturing gauge to expand to 48.0 from 45.0 in November. Looking to the weak ahead, December employment figures headline the economic calendar, with the expectations that the hiring in the world’s largest economy probably accelerated. However, more jobs are needed to sustain the economic recovery.  

 

 

Euro Climbs On Positive Business Confidence Data

The pound gained across the board during the overnight trade  after report showed that UK consumer confidence rose from record low in November. An index of consumer sentiment increased to 40 from 36 in October, which was the lowest reading since 2004, and a gauge of  consumer expectations rose by 7 points to 55. However, the reading is below its long run average, indicating that consumers remain pressured and wary about future prospects. Looking ahead to today, CBI (Confederation of British Industry) reported sales headline the economic calendar, with the expectations for the December figure to improve from previous month but to remain subdued. Expect for the pound to remain supported should the CBI sales figures surprise on the upside. 

The euro gained against the dollar during morning session after  German business confidence unexpectedly rose in December. The Ifo institute business climate index rose to a three month high of 107.2 from 106.6 in November, suggesting the Eurozone’s largest economy is weathering the region’s debt crisis. However, single currency remains extremely volatile as EU governments struggle to come out with a lasting solution for the debt crisis, pushing up sovereign borrowing costs.