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Weekly Market Update 11-05-2011

Weekly Market Update 11-05-2011

Old May 11th 2011, 12:24 pm
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Default Weekly Market Update 11-05-2011

£/€
Range of the week: 1.1339 – 1.1466
Variance of the week on £10k=€127


Major news or data for the week so far;

The Pound continued its push back against recent lows yesterday as rumours surrounding Greece receiving a further bail out package were bounded around the market. These rumours are strongly denied by Greece (just as those around the original bail out were) despite having a debt to GDP ratio or 140% - the highest in the whole of Europe. However, with the market seemingly ignoring the recent call for assistance from Portugal and only marginally shaking when Ireland finally succumbed, you have to wonder if this will have any affect on exchange rates.

The Bank of England quarterly inflation report is currently being delivered by Mervyn King. Key points so far are that the Bank of England sees inflation falling to 1.9pc within a two year period.
Shorter term there is risks of inflation up to 5pc with suspected increases in utility prices causing such a move. Although inflation in the UK still remains ‘uncomfortably high’ the VAT rise to 20pc and outside pressures from increased commodity prices are still seen as the main drivers of this level with the MPC.

Downside pressures on inflation (which are key as this is the justification for the bank not raising interest rates) are the weak UK economy – GDP for last quarter was disappointing (+0.5pc) and the stagnation in wage prices. Wage prices are a key measure of the health of an economy. In a healthy economy with rising inflation people demand higher wages to cover the higher prices being paid.

Retail Sales in the UK jumped sharply according to the British Retail Consortium at 5pc vs a drop of -3.5pc in March.


£/$
Range of the week: 1.6269 – 1.6421
Variance of the week on £10k=$:152


As the U.S. draws close the the end of their current QE cycle all focus is on what the States will do next.


£/AUS
Range of the week: 1.5041 – 1.5262
Variance of the week on £10k=AUS 221


Major news or data for the week so far;
Currently trading at new 30 year lows for buying AUD.
Expectations of an interest rate rise and strong economic data from China (a huge trading partner of the Australian economy) are helping to push the AUD to new highs.

All focus will now be on whether 1.50 can hold.


£/NZD
Range of the week: 2.0542 – 2.0750
Variance of the week: on £10k= NZD208



£/ZAR
Range of the week: 10.9010 – 11.1310
Variance of the week: on £10k= ZAR2300



£/CAD
Range of the week: 1.5610 – 1.5834
Variance of the week: on £10k=CAD224
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