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Wednesday 28th July 2010
Good Morning,
USD
The US housing data was slightly stronger than expected with the Case-Shiller house-price index recording a 4.6 percent increase in the year to May. In contrast, the consumer confidence data was weaker than expected with a retreat to a 5-month low of 50.4 for July from a revised 54.3 as confidence in the labour-market deteriorated. There was some weakening in risk appetite following the US data which also provided some dollar support as there was a retreat in high-yield and commodity currencies as oil and gold prices fell sharply. There was also a measured retreat in emerging-market currencies which curbed dollar selling and limited Euro support. There were also reports of central bank Euro selling at higher levels, notably from the Swiss National Bank and this helped push the Euro back to below the 1.30 level later in the US session. There was still underlying support for the Euro and it nudged above the 1.30 level in Asia on Wednesday as dollar demand was still subdued.
EUR
The Euro maintained a robust tone in early Europe on Tuesday and pushed to challenge resistance levels above 1.30 against the dollar. The European economic data again provided support with German consumer confidence rising to 3.9 in the latest month from a revised 3.6 for June, maintaining the recent run of favourable data. There was an annual increase in Euro-zone money supply for the first time since January. Risk appetite was also firm which helped underpin the Euro and it pushed to an 11-week high close to 1.3050 ahead of the US open.
GBP
Sterling continued to challenge resistance levels above 1.55 against the dollar in European trading on Tuesday. After an initial technical failure to break through there was a retreat to the 1.5450 support area. The latest CBI retail sales data was much stronger than expected and this triggered a fresh surge in the UK currency. The survey recorded a figure of +33 for July from a figure of -5 previously and retailers were also optimistic over the August outlook. Although distorted to some extent by methodology changes, the figure was a four-year high and Sterling was able to break convincingly above 1.55 with a peak above 1.5580 during US trading. There was also a Sterling peak close to 0.8335 against the Euro as underlying demand for the currency remained firm. Sterling also proved broadly resilient in the US session even when there was a measured deterioration in risk appetite following the US data and this does suggest that underlying demand for Sterling has increased, although sentiment could still reverse rapidly. Confidence remained firm on Wednesday with Sterling just above the 1.56 level against the dollar.
Morning Market Rates: (Please note: These are indication prices only, they are not offer rates)
GBP/USD: 1.5529
GBP/EUR: 1.1925
GBP/AUD: 1.7370
GBP/CHF: 1.6481
GBP/ZAR: 11.3984
GBP/JPY: 135.05
USD/JPY: 87.50
USD/ZAR: 7.3015
EUR/USD: 1.2960
EUR/ZAR: 9.4981
GBP/NZD: 2.1270
GBP/CAD: 1.6019
EUR/CHF: 1.3760
GBP/AED: 5.7038
And finally.....
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