FXView UK

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.

 

 

Dollar Consolidates Before Inflation Report

The pound is higher against its major rivals as investors support UK’s detachment from Eurozone debt crisis. Moody’s Investor Service and Standard & Poor’s reaffirmed recently Britain’s AAA rating, while warning Germany and France that their golden rating is in jeopardy as European leaders struggle to solve the sovereign debt crisis. The British government has pledged to maintain the most austere economic policies since World War II. On the other hand, Bank of England has started a second round of quantitative easing to stimulate the economic recovery. Expect for the pound to remain driven by market risk aversion as there are no major economic releases or public speeches scheduled for today.  

The dollar consolidated during the Asian session on signs the world’s largest economy is gaining momentum, damping demand for safer assets. The economists are projecting for the US economy to expand above 2.0%  next year after growing 1.8% this year.  At their December meeting Fed’s policy makers said “the economy has been expanding moderately” and expect to pick up slightly in 2012. Looking ahead to today, US consumer price index headline the economic calendar, with the expectations for the figures to have increased by 0.1% last month after falling -0.1% in October.

 

 

Pound Flat Before Retail Sales Release

The pound remained relatively flat during the overnight trade before British Retail Consortium releases  its November sales figures. The headline sales gauge is expected to have deteriorated to –0.3% from 0.6% in October, and core sales excluding auto fuel to fall buy -0.4% from 0.6%. Separately, BoE publishes the results of its latest quarterly inflation  attitudes survey, with the projection for the inflation expectations to remain unchanged at elevated levels. Finally, the CBI (Confederation of British Industry) publishes its industrial trends survey for December, with projections for the total orders balance to decline to –21 from –19 in November as manufacturing sector continues to suffer from weak demand.

The euro stopped its three day free fall on reports the European Central Bank is pushing to change capital rules for banks to prevent credit crunch.   The single currency found support during early morning session before Spain prepares to sell 3.5 billion euros of government debt today. Separately, German and Eurozone  PMI (Purchasing Manager Index) Manufacturing and Services releases came out today, and figures surprised on the upside supporting the single currency. Lastly, Eurozone CPI inflation release is due out today with expectations for the figure to remain flat at 3.0% in November.

 

 

Dollar Gaines Before Fed's Meeting

The pound is lower against the dollar this morning as investors run for safety of the US currency after EU summit in Brussels failed to ease the markets. UK Prime Minister David Cameron vetoed EU treaty change on Friday, risking leaving the Britain isolated from its European partners and making debate within its own coalition government. There are no economic releases or policy speeches scheduled for today. Looking to the weak ahead, the main release will be inflation data for November, due at 9:30 on Tuesday. Market participants project for the CPI inflation to fall to 4.8% year on year from 5.0% in the previous month, with all seasonal goods declining due to the unexpectedly good weather conditions. In addition, RPI (Retail Price Index) release is also scheduled for Tuesday, and is likely to go up by 0.2% in November. The labour market data is scheduled for Wednesday, with the expectations for the ILO (International Labour Organization) unemployment rate to remain unchanged at 8.3% in October. The average earnings growth is projected to moderate to 2.0% in three month through October from 2.3% and core earnings growth to remain at 1.7%. Finally, on Thursday we have Retail sales data, with the expectations for the headline sales figures to deteriorate by –0.4% in November.    

The euro consolidated against most of its major rivals after Moody’s Investors Service said it will review ratings for all EU countries, as European leaders failed to produce “decisive” measures to end the debt crisis. EU leaders agreed to tighten the rules to curb future debts and added 200 billion euro to their bailout fund. The single currency also came under pressure during the overnight trade before Italy and France sell government debt today. Looking to the weak ahead, Eurozone purchasing managers index and German ZEW (Centre For European Economic Research) surveys headline the economic calendar, with economist projecting for numbers to prove further evidence of deteriorating economic conditions.  

The dollar gained across the board during the Asian session as European solution failed to to ease the risk aversion in the markets. However, traders will pay close attention on dollar as US economy is back under the spotlight this week. The major event this week will be the Federal Reserve’s policy meeting on Tuesday, with market participants paying close attention on Fed’s Bernanke language. The expectations are for the Fed to keep interest rate at record low of 0.25%, but the focus will be on so called Operation Twist. Also scheduled for this week are the retail sales data and inflation figures, with the expectations for the figures to improve slightly. 

 

Euro Volatile As EU Leaders Reach Agreement

The pound is mixed this morning, gaining against the euro, but consolidating against the dollar as investors’ opted for the safety of the US currency before EU leaders gather in Brussels today. Sterling also found support after data showed the UK trade deficit narrowed in October on increasing exports as demand soared from the countries outside the European Union. The trade gap fell to 7.56 billion pounds from 10.2 billion in September as exports rose 9% in October, while imports fell 1.5%. However, economists are warning that UK exports remain “particularly vulnerable” to weaker Eurozone economic outlook. In addition, the statistic office said producer prices rose 0.2% in November from October. Annual factory gate price inflation slowed to 5.4% in November from 5.5.7% in the previous reading. Expect for the pound to remain driven by market risk aversion as EU leaders gather in Brussels today.

The euro gained against the dollar during morning session after Eurozone leaders increased the rescue fund and agreed to tighten the budget rules to tackle the debit crisis. The single currency was supported after officials agreed to add 200 billion euro to their rescue fund and to tighten anti-deficit rules within its member states. The only country to refuse to back the new treaty regulations was Britain as new rules do not give them the exclusive right to have an exclusive veto on future financial regulations. The single currency managed to pair some of its recent loses against its major rivals as market participants recognize that EU leaders have made progress and moved from point blank. Separately, German CPI figures were released today, showing that inflation in Europe’s largest economy slowed in November on worsening economic outlook. The inflation rate declined to 2.8% from 2.9% in October, confirming that consumer prices remain subdued as Eurozone debt crisis hampers growth.       

 

Euro Drops After S&P Warns On Eurozone Ratings

The pound is mixed this morning, gaining against the broadly weaker euro, but consolidating against the dollar after UK retail sales fell the most in six months in November. Sales at stores dropped by -1.6% from a year earlier after dropping by –0.6% the month before. This month’s data indicate that the UK high street continues to face very tough trading conditions as even high levels of price discounting are failing to give a boost to sales. Economic turmoil in Europe and growing uncertainty elsewhere in the world has led the Organization for Economic Cooperation and Development (OECD) to indicate that the UK may already be in recession.  Looking ahead to today, Bank of England is releasing the record of the November interim Financial Policy Committee meeting held on 23 November. Expect for the pound to remain driven by market risk aversion as EU leaders discuss the future of single currency at summit in Brussels this week.

The euro consolidated during the overnight trade after Standard & Poor’s said it may cut the rating of Germany and France and other 13 members of the euro-region. S&P yesterday put all euro-zone nations on watch for a credit downgrade, placing euro area’s six AAA rating countries under “Credit Watch Negative”, pending the result of the EU summit on December 09. Looking ahead to today, Eurozone growth figures are scheduled for release today, with expectations for the figures to fail to accelerate in third quarter. Expect for the euro to remain volatile for the reminder of the week before European Leaders meet in Brussels on Friday.

 

Euro Gains Ahead Of This Week's EU Summit

The pound started the week slightly stronger after report showed that service sector in UK expanded in November. The PMI (Purchasing Managers Index) gauge of services activity surprised on the upside printing 52.1 from 51.3 in October. However, sterling sentiment was dented during the overnight trade after Lloyds Employment confidence release deteriorated to –75 in November from –72 in the previous month. Later in the week, we have Bank of England MPC meeting on Thursday and analysts expect monetary policy to remain unchanged with base rate at 0.5% and the QE program at 275 billion pounds. Industrial and manufacturing production data for October are released on Wednesday, with expectations for both figures to fall by –0.3% as UK economy continues to struggle. Finally, the producer price data and Trade balance figures are scheduled for Friday, with the expectations for the visible trade deficit to have narrowed in November.

The euro gained against most of its major rivals after Italian government approved a plan to cut its fiscal deficit ahead of the European Summit on debt crisis, easing pressure from the single currency. Markets relieved after Prime Minister Mario Monti yesterday proposed to cut the nation’s debt and reduced the risk of Italy sparking the euro’s breakup. German and French policymakers are meeting today, to start the convention aimed at fixing the debt crisis. German, French and Eurozone PMI Services release came out this morning and the figures continued to deteriorate as debt crisis is hampering single region economy. Looking to the week ahead, ECB meeting headlines the economic calendar, with expectations for the European central bankers to cut the base rate to 1.0% from 1.25%. The ECB policymakers already decreased the base-borrowing rate from 1.5% to 1.25% at previous meeting. Nevertheless, market attention will be directed at the Eurozone Summit in Brussels, which is scheduled to start on Friday. Expect for the single currency to remain volatile against its major rivals before European leaders meet on December 09 to resolve ongoing debt crisis.

The dollar consolidated across the board during Asian session after US figures on Friday showed that jobless rate came down to 8.6% in November. Employment climbed by 120,000 workers in November; with more than half the hiring coming from retailers and temporary help agencies. The report also damped speculation that Federal Reserve policymakers meeting on December 13 will continue with a large scale of asset purchases. Looking to the week ahead, MBA Mortgage Applications, Trade Balance and University of Michigan Consumer Confidence headline the economic calendar. Expect for the dollar to remain driven by market risk aversion throughout the week before European leaders discuss the future of single currency at their meeting in Brussels.  

 

Dollar Drops Ahead Of The US employment data

The pound consolidated slightly against the euro after industry report released yesterday showed UK manufacturing shrank in November at fastest pace since June 2009. Looking ahead to today PMI Construction release headline the economic calendar, with the expectations for the figures to have dropped to 52.0 in November from 53.9 in the previous month. Expect for the pound to be driven by market risk aversion as major release today is US jobs data.

The European single currency gained against most of its major rivals during the Asian session after the IMF said it may receive more funding to combat Europe’s debt crisis. However, the gains in euro were limited before German Chancellor Angela Merkel outlines her stance on the Eurozone debt crisis ahead of a December 09 summit. ECB policymakers will meet on December 8 for a monthly meeting, and market participants believe the ECB will cut benchmark interest rate by at least 0.25%. 

The dollar slipped across the board during the overnight session on speculation the US economy is gathering momentum, damping demand for its safe haven appeal. The greenback weakened ahead of the employment report scheduled for today, which is projected to show the pace of hiring in US quickened. Nonfarm payrolls are expected to have climbed by 125K in November after rising 80K the previous month, but the unemployment rate remained unchanged at 9.0%. Expect for the greenback to consolidate further against its major rivals should we see the employment data coming out in line with expectations.

 

Euro Strengthens On Central Bank's Action

The pound is mixed this morning, gaining against the dollar, but consolidating against the euro after report showed that UK manufacturing sector contracted in November.  The PMI Manufacturing index fell to 47.6 after reaching 47.8 in October. British manufacturers are suffering as the sovereign debt crisis jeopardizes the outlook for exports in Europe, UK’s largest partner, and as global economy cools. The Office for Budget Responsibility cut its 2012 economic growth forecast to 0.7% from 2.5% this week and BoE Governor Mervyn King said the UK is “increasingly threatened” by the crisis in Europe. Expect for the pound to remain volatile against its major rivals as PMI Construction is the only release scheduled for the reminder of the week.  

The euro gained against most of its major rivals after world’s largest central banks pledged yesterday to lower the cost of emergency dollar loans to banks in a coordinated move to ease liquidity strains. The single currency benefited even after the report showed that Eurozone manufacturing industry contracted in November as the global demand weakened and region moved toward recession. The Eurozone PMI Manufacturing figure remained unchanged at 46.40 in November; any reading below 50.00 demonstrates that the sector is contracting. Expect for the euro to remain weak against its major rivals before EU officials’ summit on December 09 in Brussels.

The dollar consolidated against its major rivals as market participants commended the Central Bank’s move to reduce the emergency dollar funding to ease Europe’s sovereign-debt crisis. The stocks jumped around the globe and greenback dropped as much as 1.3% against the euro as central bank’s represented their power to ease the financial markets. Looking ahead to today, ISM Manufacturing release headlines the economic calendar, with the expectations for the figures to rise to 51.8 in November from 50.8 in the previous month. Expect for the dollar to remain extremely volatile ahead of the November employment release scheduled for Friday.