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Weekly Market Update 01-06-2011

Weekly Market Update 01-06-2011

Old Jun 1st 2011, 1:59 pm
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Default Weekly Market Update 01-06-2011

Range of the week: 1.1369 – 1.1612
Variance of the week on £10k=€ 243

With London closed on Monday for the last of a number of Bank Holidays in May, the Euro took the opportunity to take back some of the ground it has lost recently – this after reports in the US press said that Germany was considering backing down from its insistence that Greek Debt be restructured as apposed to a further bailout.

This helps the EU with its proposal of a second bailout, which needs to be signed off and in place before the end of June – to ensure Greece does not default on its current outstanding debts.

Tuesday, all eyes were on the ‘saving grace/power house’ of Europe – Germany – with the release of its retails sales and unemployment data.
Sales in general were up by 0.6% from the previous month but not up as much as analysts were predicting. This was mainly attributed to a slow in demand from a politically volatile middle east and Japan still trying to recover from the natural disaster.
On the employment front things looked better than the previous month, with the overall number of people unemployed dropping by 8000. This was however again less than the 31000 forecasters were hoping for.

Accordingly the Euro managed to come back down from the 9 week high of 1.1611. All eyes will continue watch the movements in Europe and any good or bad news around Greece will cause immediate reaction.

Range of the week: 1.6131 - 1.6546
Variance of the week on £10k=$415

The fragility of the US economy/economic recovery was exposed again this week, with business and consumer confidence figures reflecting the depressed outlook in the worlds biggest economy.
This fragility saw the US currency weaken 3% against the Pound in as many days – moving from around 1.61 to 1.6545.

The next figure to watch for will be the ADP employment figure due out later today.

Range of the week:1.5278 – 1.5506
Variance of the week on £10k=AUD228

Despite a very poor GDP from Australia, the dollar managed to hold its ground against Sterling and currently trades just marginally above the 26 year low we saw in May of 1.5040.
The Australian economy shrank by 1.2% in the first quarter of 2001, 0.2% worse than economists were predicting. Largely attributed to the natural disasters experienced earlier in the year. The commodity rich exporter saw major disruptions in the export of raw materials in early 2011 and is definitely feeling the effects now.

The interest rate outlook is now again in focus and a hike towards 5% seems to be what most market participants are expecting. Accordingly, the Australian Dollar looks set to continue to outperform the Pound and could test lows last seen decades ago.

Range of the week:1.9901 – 2.0454
Variance of the week: on £10k=NZD553

Wow!!!! One Pound buys you less than 2 New Zealand Dollars. GBPNZD – how low can you go?

The NZD has benefitted from some appetite for risk and has broken below the psychological 2.00 mark. High yielding currencies are attracting a lot of investment right now and if this continues, we may very well see the NZD test the lows seen in January of 1.9850.

Range of the week: 11.1150 – 11.4910
Variance of the week: on £10k=ZAR 3760

Range of the week:1.5794 - 1.6134
Variance of the week: on £10k=CAD 340

Last night the Central Bank in Canada left interest rates unchanged at 1% as expected, however they did ‘change their tune’ in the language used to indicate the potential next move by the central Bank.
They stated that they expected inflation to breach 3% in the near term and this would pressure the central bank to withdraw some stimulus. I.e. increase interest rates.

This helped the Canadian Dollar attract more yield seeking investment and drove it lower from around 1.61 to 1.5850.
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