Foreign Exchange - UK Daily Update - Written by Jeremy on Friday, July 13, 2012 8:30 - 0 Comments
World First Morning Update 13th July: USD still King of the Castle
The perpetual grind lower in risk, saw King Dollar come up trumps yesterday in the European session. Unsettling news from France and the deteriorating public angst in Spain has spooked markets and really painted a bleak growth outlook for the Eurozone community. GBPUSD dropped a point to sub 1.54, a new 6 week low. EURUSD got jealous and decided to follow suit breaking below the 1.22 support, a new 2 year low.
News that Renault was to cut 8000 jobs put European Equities on the back foot from the morning whistle. Continuing protests in Spain to further austerity measures continues to cast a shadow and took away from the modestly upbeat bond sale we saw from the Italians. For the first time, in living memory we saw peripheral yields lower! Italy’s borrowing costs fell to 2.697% down from 3.97% on the sale of one year bills. While 10 – year yields (long term benchmark) still remain buoyant to the upside, it’s a big improvement mainly brought on by the progress in the Spanish banking crisis.
More positive data from the US went a long way to confirming that the FED will withhold on further QE. Jobless figures showed a fall of 26,000 this week, the lowest levels in 4 years. This was a contributing factor to the Dollar rush we saw.
The big news from the overnight Asian session was Chinese GDP for Q2 which posted a YOY figure of 7.6% down from 8.1% in Q1. This is the slowest pace we have seen the Chinese economy grow in 3 years. However we have seen the PBOC already cut rates twice in the last month with the expectation of a further 2-3 cuts in the future. The effects of the rate cuts we have seen will need more time to show any signs of effect. The economic outlook for Q3 and Q4, peg expected growth at 8% and 8.3% respectively. We saw EURUSD rally but there seems to be resistance forming at 1.2215.
Ireland passed its latest Troika review but was warned that unemployment was still unacceptably high. Last week’s return to the debt markets should start to materialise into growth and higher employment for the Emerald Isle.
Looking forward to today we have inflation for the two struggling peripherals, Spain and Italy with a fairly important sale of 3 year debt for the Italians. Hopefully we see yields fall in a similar fashion to the sale of 12 month debt yesterday. Should be a relatively quiet session, although I have eaten my words before…
Have a great weekend
Latest exchange rates at time of writing
Indicative Rates Sell Buy
GBPEUR 1.2640 1.2664
GBPUSD 1.5420 1.5446
EURUSD 1.2190 1.2212
GBPJPY 122.24 122.51
GBPAUD 1.5173 1.5200
GBPNZD 1.9475 1.9505
GBPCAD 1.5690 1.5717
NZDUSD 0.7905 0.7933
GBPZAR 12.84 12.89
USDZAR 8.3160 8.3540
GBPPLN 5.30 5.33
EURJPY 96.60 96.85
Please note these rates are “interbank” rates ie they indicate where the market is currently trading and are not indicative of the rates offered by World First. Rates are dependent on amount transacted. It is important to remember that foreign exchange rates fluctuate all the time. The rate you will receive will depend on the amount and currency you require. Please call 0800 783 6022 or +44 20 7801 9080 for a live quote or login in to your Online Account here.