| Thursday 11th March 2010
Good Morning,
EUR
The Euro again dipped to test support below 1.3550 against the dollar on Wednesday and the US currency was also unable to sustain a break below this level for the second day. The Euro was able to stage a technical recovery during the day, bolstered by the ability to hold support and there was also some easing of tensions surrounding the Greek debt situation. The Euro pushed to highs above 1.3650 during the New York session as risk appetite was firm.
USD
There were no major US economic data releases during the day, although the budget deficit was at a record level for February which is likely to cause some renewed doubts over the US fundamentals and may hamper the dollar. US Federal Reserve policy will be an important focus over the next week with the latest FOMC meeting due to be held on March 16. There have been further comments from Fed officials suggesting unease with the terminology stating that interest rates will be left at very low levels for an extended period. In this environment, there is likely to be increased expectations of a change in the Fed’s language following the meeting. This speculation should provide some support to the dollar, although buying may be limited by doubts whether interest rates will actually be increased in the short term. The Euro edged slightly lower in early Europe on Thursday.
GBP
The UK currency remained under pressure on Wednesday as selling pressure above 1.50 persisted with the Euro approaching resistance close to the 0.91 area and the trade-weighted index weakened to an 11-month low. The latest industrial data was weaker than expected with a 0.9 percent decline in manufacturing output for January, contrary to expectations of a monthly increase, although the data is likely to have been distorted by bad weather conditions. The NIESR estimated that GDP rose 0.3 percent in the year to February following a revised 0.6 percent increase the previous month. The data should maintain expectations that the economy is recovering, but doubts over the economy’s strength will also continue. Bank of England member Posen downplayed the risk of a sterling downturn, although he would not be in a position to say anything else. Underlying confidence in the economy is still likely to be very weak with continuing fears over the government-debt situation. A weaker dollar did allow a Sterling recovery to near 1.50 from lows below 1.49 where resistance remained strong.
Morning Market Rates: (Please note: These are indication prices only, they are not offer rates)
GBP/USD: 1.4920
GBP/EUR: 1.0921
GBP/AUD: 1.6285
GBP/CHF: 1.5975
GBP/ZAR: 11.1250
GBP/JPY: 134.36
USD/JPY: 89.90
USD/ZAR: 7.4120
EUR/USD: 1.3580
EUR/ZAR: 10.1182
GBP/NZD: 2.1320
GBP/CAD: 1.5301
EUR/CHF: 1.4581
GBP/AED: 5.4885
And finally,
Have a great day
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