httpvh://www.youtube.com/watch?v=kZDJySRJd20

The roller coaster week for the markets continued yesterday with  poor growth and job figures from the US and a worrying speech from the Head of the Eurogroup about Greece.

US GDP printed at 1.8% in Q1, falling from the 3.1% in Q4 2010. This disappointed versus the consensus view of an increase to 2.2%. As it was here in the UK, personal spending was revised lower by 50bps with confidence still very fragile in the world’s largest consumer economy. This alongside US initial jobless claims that rose to 424k, above consensus, saw the dollar get smacked around in the early afternoon session. At least until Jean-Claude Juncker took the stage.

Juncker is the head of the Eurogroup, a meeting of EU finance ministers, and is known as Mr Euro. He spoke yesterday and instantly put the single currency on its back by stating that the IMF may be unwilling to pay the next tranche of the bailout package to Greece next month as it is not sure that the next 12 months of Greek financing is guaranteed. He was also reticent as to whether the EU would be able to make up the difference. We warned of volatility in yesterday’s update as a result of these ‘tapebombs’ and volatility was what we got. EURUSD fell by a full cent in the space of 60mins while GBPEUR printed prices in the 1.16s for the first time since mid March; a very encouraging sign. Traders in Asia have subscribed to the ‘Buy Euro When Cheap’ method of trading and bid the single currency overnight but signs are that the euro is set for further falls.

Overnight we saw some more positive signs for the pound with GBPUSD pushing through the 1.64 handle as a result. GfK Consumer Confidence rose to -21, its highest level since November, as the sunny weather, Royal wedding and better economic data gave people the feel-good factor. So well done, all you happy people, give yourself a pat on the back. UK house prices also surprised higher this morning with the Nationwide survey showing a 0.3% increase in prices in the past month versus an expected 0.1%.

We expect further vol to come from the G8 meeting this afternoon with European consumer confidence data also expected to see the euro retreat this morning.

Have a great weekend.

Latest exchange rates at time of writing