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Pound Consolidates Versus Euro On Optimism Over Italy

The pound dropped across the board during the overnight trade, extending its two-day decline against the euro on optimism European officials are taking steps to address the region’s debt crisis. The European single currency strengthened against its major peer’s after Greek parliament elected Mr. Lucas Papadems to act as new Prime Minister and before Italy’s senate votes on debt reduction measures today. Sterling is also heading for a weekly decline against the dollar as investors run for safety of the US currency after Treasury Secretary Timothy F Geithner said Europe remains the “central challenge’ to economic growth. Looking to today, the Office for National Statistics publishes producer price data for October. The expectation for input prices is to have been flat on the month on lower oil and electricity prices. Headline output prices are expected to have increased by 0.1%, and core output prices are projected to rise by 0.2%. The manufacturing PMI survey has suggested significant easing in producer price pressures in recent months, which has not materialized in the official data. Recent economic data is also suggesting that the UK economy could stagnate until next summer with a significant risk of double-dip recession. Expect for the pound to remain in current levels for the reminder of the week as US markets are closed due to the Veteran’s Day bank Holiday.    

Pound Volatile Ahead Of The BoE Meeting

The pound is higher against the broadly weaker euro but consolidated against the dollar before the Bank of England makes its latest policy announcement at noon. Sterling rose to the best levels in eight months against the euro on concern Italy and Greece will struggle to form governments strong enough to implement the austerity measures. Today’s focus in UK is on the BoE’s monthly meeting, with market participants expecting the policy to remain unchanged, with base interest rate fixed at 0.5% and the quantitative easing plan to stay at 275 billion pounds. In addition to this month’s policy decision, MPC will generate the November Inflation Report, to be published next Wednesday. It is expected for the report to show weaker outlook for growth and inflation than the August Report, prompting speculations the MPC might announce expansion of QE in near future. The Confederation of British Industry said that the UK recovery will stall in this quarter and the growth in 2012 will be about half the pace previously forecasted as the Eurozone debt crisis intensifies. The economy is expected to expand 0.9% this year and 1.2% in 2012, compared with previous forecasts for growth of 1.3% and 2.2%. Expect for the pound to remain in current levels against the euro as debt crisis in the Eurozone unfolds.

Pound Volatile Ahead Of The Trade Balance Figures

The pound remained flat against the European single currency, but gained versus the dollar as UK shop price inflation eased to the slowest this year in October. Retail prices rose by 2.1% from a year earlier, down from 2.7% in September as flagging consumer demand pushed down food prices. Wile UK consumer price inflation accelerated to 5.2% in September, the Bank of England forecasts it will ease toward 2% target through 2012. Central bank’s MPC (Monetary Policy Committee) meets tomorrow and will probably maintain its target for quantitative easing at 275 billion pounds and leave base rate at record low of 0.5%. Looking ahead to today, trade data for September headline the economic calendar, with the expectations for the visible trade deficit to have widened slightly to 7.9 billion pounds. Expect for the pound to remain at this levels ahead of the BoE’s monthly meeting scheduled for tomorrow.

The euro consolidated against the dollar during the overnight trade after Italian PM Silvio Berlusconi offered to quit the government. Mr Berlusconi pledged last night that he would resign after parliament passes a new financial stability law that will implement fresh austerity measures demanded by the European Union. Separately, Greek Parliamentary talks on forming a new government have been stalled as agreement between PM George Papandreou and opposition government face additional challenges. Expect for the euro to remain extremely volatile as turmoil in Greece and Italy drag the single currency down.  

 

Euro Consolidates As Italy Faces Parliamentary Vote

The pound is flat against the dollar, but jumped against the broadly weaker euro on speculation EU is failing to overcome sovereign debt crisis. Sterling reached best levels against the single currency since early March of 2011. Looking to the week ahead, Bank of England policy decision headlines the economic calendar, with expectations for the MPC to vote to hold benchmark rate at 0.5% and to maintain the quantitative easing programme at 275 billion pounds. On the data front, ONS (Office for National Statistics) publishes industrial and manufacturing production data for September, with potential for the figures to have increased by 0.1% on monthly basis. Scheduled for Wednesday is the trade data for September, with expectations for the visible trade balance to have deteriorated slightly to 8.0 billion pounds, after dropping to 7.8 billion in the previous reading. Finally, Friday sees the publication of producer price data for October, with projections for the overall output prices to have increased by 0.1% on the month. Expect for the pound to remain supported against the euro, but to be on the downside against the dollar should we see the UK economy showing further signs of faltering.

The euro dived against its major rivals during the overnight trade as turmoil in Eurozone is dragging the region into recession. The single currency consolidated after Greek PM George Papandreou agreed to step down to allow the creation of a national unity government. Also pressuring the euro is the fact that Italian borrowing costs climbed to the euro-area record as PM Silvio Berlusconi’s coalition partners pressure him to quit before a parliamentary vote tomorrow. Finance ministers from the Eurogroup, the 17 nations with single currency, discuss in Brussels today about the ongoing sovereign debt crisis. Also scheduled for today are the Eurozone Retail Sales figures for September, with expectation for the numbers to decline by –0.1% on monthly basis. Looking to the week ahead, French industrial/manufacturing production figures coupled with German CPI release headline already busy economic schedule in the region.

The dollar remained relatively strong against its major counterparts as investors run for safety of the US currency during euro-region doldrums. Gold also reached its highest levels, climbing as much as 1.5 % to $1,770.2 as market participants perceive that global economy is facing significant downside risks. Looking to the week ahead, Trade Balance, Monthly Budget Statement and University of Michigan Confidence release headline the economic calendar. Expect for the dollar to remain strong against the euro as focus shifts on Italian debt crisis.  

 

Euro Drops Versus Dollar on Greek Turmoil

The pound is mixed this morning, consolidating against the euro, but gaining against the dollar before US Labor Department report October employment figures today at 12:30. Sterling consolidated slightly against the euro after Greek Prime Minister George Papandreou scraped referendum plan introduced a few days earlier. There are no economic releases or policy speeches scheduled for today. At the G20 summit in Cannes, UK Prime Minister David Cameron has led efforts to double the IMF’s financial resources secured to help dealing with the escalating debt crisis in the Eurozone. Expect for the pound to remain in current ranges against its major rivals ahead of the Bank of England’s monthly meeting scheduled for next Wednesday.

The euro remained under pressure during the overnight trade on fears Greece will default and the region’s debt crisis will cause another recession. Greek PM Papandreou scrapped a referendum on an accord with the European Union to avert a split in his party before a confidence vote scheduled for today. However, opposition leader Antonis Samaras refused sharing power with Papandreou and called on the PM to step down. On the economic docket scheduled for today PMI Services release headline the economic calendar in the region, with the expectations for the figures to have deteriorated further in October. Expect for the single currency to remain volatile against its major rivals as Group of 20 leaders meet in Cannes today to discuss debt crisis in the euro region.

The dollar gained against the euro but consolidated against the pound ahead of the US employment figures release. The expectation for the non-farm payrolls is to climb by 95,000 in October following a 103,000 increase in September, with an unemployment rate projected to remain unchanged at 9.1%. The G20 meeting in Cannes is one of the main events of the day, however the meting is not expected to be a major market mover as G20 leaders will take no action about Eurozone’s debt crisis.

 

Euro Consolidates Before ECB Meeting

The pound remained relatively flat against broadly weaker euro, but consolidated against the dollar as risk aversion in the markets pushed investors into greenback’s safety. Looking ahead to today services PMI for October headline the economic calendar, with the expectations for the figures to have dropped to 52.0 from 52.9 in September. Weak domestic sentiment and ongoing debt crisis in the Eurozone will probably weight on services output growth, although small growth in the sector is projected. NIESR’s (Institute of Economic and Social Research) recent forecasts stated the UK faces a 70% probability of falling into another recession if euro area policymakers continue to muddle through the debt crisis. Even if the lawmakers succeed in resolving the crisis the institute puts the risk of recession for the UK at close to 50%. With light economic calendar scheduled for today expect for the pound to remain driven by the events in the Eurozone.

The euro dropped across the board during the overnight trade as Greek decision to hold a referendum whether to stay in single currency has brought Europe into renewed turmoil. The euro tumbled after French President Nicolas Sarcozy said Greece won’t receive a ‘single cent” in aid without holding to the terms of a rescue agreement from last EU summit. World leaders gather in Cannes today with the agenda for the summit of the Group of 20 leading economies being the fate of the Eurozone. Market attention today turns to the European Central Bank’s monthly meeting as Mario Draghi chairs his first policy meeting. Market participants speculate the central bank will lower its borrowing costs from 1.5% in order to ease recession risks in the region. Expect for the euro to experience an excessive volatility today should the central bank lower its benchmark interest rate.     

 

Euro Up Ahead of The G20 Meeting

The pound pared some of its yesterday gains against the euro during the overnight trade, but gained against the dollar on prospects Federal Reserve will increase its asset purchase program at its two-day meeting concluding today. Sterling consolidated against the euro on speculation Greece’s Cabinet backed PM George Papandreou’s plan to put a bailout package to a referendum. Looking ahead to today, the construction PMI for October headlines the economic calendar, with expectations for the figure to drop slightly to 50.0 from 50.1 in September. Separately, BoE policy member, Adam Posen, said to BBC that quantitative easing combined with financial reform would be a positive push that would improve economic activity. He said the UK is finding a hard time to grow strongly given the high levels of debt but stated that improved forms of financing for SME’s would make the quantitative easing more effective. Expect for the pound to remain driven by market risk aversion ahead of the ECB’s and Federal Reserve’s monetary meetings scheduled for this week.

The euro gained across the board during Asian session after anonymous Greek official told reporters that Cabinet gave Papandreou unanimous backing for his referendum plans. Greek PM George Papandreou will brief German Chancellor Angela Merkel, French President Nicolas Sarcozy and ECB President Mario Draghi on developments in Greece. Group of 20 leaders will also meet tomorrow to discuss the debt crisis in the Eurozone. On the economic docket, German and Eurozone PMI Manufacturing for October are scheduled for today with the expectations for the figures to deteriorate further. Also scheduled for today is the German employment data, with the expectations for the October unemployment rate to remain unchanged at 6.9%.

The dollar dropped against most of its major rivals during overnight session on speculation Federal Reserve may consider additional asset purchases following their two-day meeting concluding today. Market participants believe that Fed officials are weighing further quantitative easing options even after US economy expanded by 2.5% in the previous quarter. However, the FOMC (Federal Open Market Committee) said after its September meeting that it saw “significant downside risks” to the US economy from the global financial downturn. The central bank will release its decision and updated economic forecasts at the conference today. Expect for the dollar to remain volatile against its rivals before Fed announce its decision and ahead of the US non-farm payroll release scheduled for the end of the week.

Euro Dives On Greek Default Concerns

The pound jumped against the broadly weaker euro during the overnight trade, but consolidated against the dollar as investors run into the safety of the US currency. Looking ahead to today, third quarter GDP data headlines the economic calendar, with the expectations for the UK economy to expand 0.3% in three months through September after growing 0.1% in the previous reading. Britain’s economic recovery is having hard time to build up the momentum as economy barely grew in the first and second quarter of the year. Also scheduled for today is the October PMI manufacturing release, with the expectations for the figures to deteriorate to 50.0 from 51.1 in the previous month (everything below 50.00 level marks the contraction in the sector).

The euro dropped across the board during the overnight trade after Greek PM George Papandreou pledged to hold a referendum on the EU’s bailout plan for the nation. Papadreou’s call for a referendum and a parliamentary confidence vote raised concern about Eurozone bailout plan and increased chances for Greece to default. Many analysts believe that most Greeks see the agreement on a bailout package and a debt writedown as negative arrangement. Major release scheduled for this week is the European Central Bank monthly meeting on Thursday, and it will be the first meeting presided by new ECB President Mr. Mario Draghi. Market participants speculate that ECB officials are going to cut base interest rate from the 1.5% level for the first time since 2009. Expect for the euro to remain under pressure as there are no major releases or public speeches scheduled for today.