Weekly update W/E 03.12.2010
Dec 1st 2010, 11:21 am
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Weekly update W/E 03.12.2010
The ongoing sovereign debt crisis continues to dominate FX movements. There has been a lot of economic data released so far though the impact has been limited as the focus is contagion after Ireland’s bailout failed to calm markets.
£/€
Range of the week: 1.1733 – 1.1999
Variance of the week on £10k= €266 Worth reminding clients that the move has been predominantly due to weakness in the Euro, not Sterling strengthening and the market can change very quickly. Just 6 weeks ago we were at 1.1180!
Major news or data for the week so far
The cost of borrowing for Portugal, Italy and Spain has continued to rise this week signalling that investors continue to see increased risk in buying the debt of these countries. Portugal is in bailout territory with the cost of borrowing up above 7%. There have been very few comments this from the EU regarding any support for Portugal though the mechanism is in place were they to need it. S&P put Portugal’s sovereign credit ratings on a negative credit watch yesterday evening. All of this has weighed on the Euro with it hitting a 2 ½-month low against the Pound just shy of 1.20.
£- UK consumer confidence dropped last month.
€- German unemployment dropped less than expected for the 2nd month in a row though the unemployment rate remains one of the lowest in the EZ at 7.5%
£+/- Nationwide house price index (Nov) came in just above expectations at -0.3%
€+ German retail sales (Oct) almost double the expectation up 2.3% (you know things are really good in Germany when German consumers are spending!)
€+ EZ PMI Manufacturing (activity in the manufacturing sector) remains firmly in positive territory though this is really only due to Germany & France’s contribution as the PIIGS are either seeing no growth or are in decline.
£+ UK PMI Manufacturing was much better than expected. The level of activity was the highest seen in 16 years!
Still to come:
ECB rate decision tomorrow, focus on European banks and their reliance on borrowing funds direct from the ECB rather than the capital markets
UK Construction activity, has been slowing in recent months
UK service sector data, could be another positive surprise
EZ retail sales, expected to show an increase for the first time in a few months
£/$
Range of the week:1.5485-1.5650
Variance of the week on £10k= $175
Major news or data for the week so far
As the nervousness caused by the EZ situation continues so the Dollar has strengthened as investors seek the perceived safety of the greenback. Quiet so far on the data front from the U.S. but both the Chicago PMI and consumer confidence figures released yesterday were a lot better than expected.
Today we have another release of manufacturing data, the private payrolls numbers from ADP as well as the Fed’s beige book released tonight. The Beige book is a collection of anecdotal information from each of the Federal Reserve Banks on current economic conditions in its District. The important number will of course be the employment data on Friday with the market expecting another positive increase in jobs created similar to last month of around 150,000.
£/AUS
Range of the week:1.61-1.6320
Variance of the week on £10k= A$220
Major news or data for the week so far
A$- Australia’s current account balance between July and September was worse than expected at A$ -7.8bn. A negative value (current account deficit) means that there is a net capital outflow of income, and transfer payments to and from the country.
A$- 3rd Quarter GDP growth was below expectations and was very weak at just 0.2%. that compares with 1.1% the previous quarter
£/NZD
Range of the week:2.0670-2.10
Variance of the week: on £10k=N$330
Major news or data for the week so far
Better than expected trade data with a smaller deficit than expected and a decent improvement in business confidence.
£/ZAR
Range of the week:10.95-11.15
Variance of the week: on £10k= ZAR2,000
Major news or data for the week so far
Strong manufacturing data released yesterday has supported the Rand.
£/CAD
Range of the week:1.5815-1.6010
Variance of the week: on £10k=C$195
Major news or data for the week so far
C$- Canada’s current account for July-September was in deficit and worse than expected.
C$- GDP growth for September was expected to be +0.1% but came in at -0.1% leading to the Dollar weakening by around 1% yesterday.
£/€
Range of the week: 1.1733 – 1.1999
Variance of the week on £10k= €266 Worth reminding clients that the move has been predominantly due to weakness in the Euro, not Sterling strengthening and the market can change very quickly. Just 6 weeks ago we were at 1.1180!
Major news or data for the week so far
The cost of borrowing for Portugal, Italy and Spain has continued to rise this week signalling that investors continue to see increased risk in buying the debt of these countries. Portugal is in bailout territory with the cost of borrowing up above 7%. There have been very few comments this from the EU regarding any support for Portugal though the mechanism is in place were they to need it. S&P put Portugal’s sovereign credit ratings on a negative credit watch yesterday evening. All of this has weighed on the Euro with it hitting a 2 ½-month low against the Pound just shy of 1.20.
£- UK consumer confidence dropped last month.
€- German unemployment dropped less than expected for the 2nd month in a row though the unemployment rate remains one of the lowest in the EZ at 7.5%
£+/- Nationwide house price index (Nov) came in just above expectations at -0.3%
€+ German retail sales (Oct) almost double the expectation up 2.3% (you know things are really good in Germany when German consumers are spending!)
€+ EZ PMI Manufacturing (activity in the manufacturing sector) remains firmly in positive territory though this is really only due to Germany & France’s contribution as the PIIGS are either seeing no growth or are in decline.
£+ UK PMI Manufacturing was much better than expected. The level of activity was the highest seen in 16 years!
Still to come:
ECB rate decision tomorrow, focus on European banks and their reliance on borrowing funds direct from the ECB rather than the capital markets
UK Construction activity, has been slowing in recent months
UK service sector data, could be another positive surprise
EZ retail sales, expected to show an increase for the first time in a few months
£/$
Range of the week:1.5485-1.5650
Variance of the week on £10k= $175
Major news or data for the week so far
As the nervousness caused by the EZ situation continues so the Dollar has strengthened as investors seek the perceived safety of the greenback. Quiet so far on the data front from the U.S. but both the Chicago PMI and consumer confidence figures released yesterday were a lot better than expected.
Today we have another release of manufacturing data, the private payrolls numbers from ADP as well as the Fed’s beige book released tonight. The Beige book is a collection of anecdotal information from each of the Federal Reserve Banks on current economic conditions in its District. The important number will of course be the employment data on Friday with the market expecting another positive increase in jobs created similar to last month of around 150,000.
£/AUS
Range of the week:1.61-1.6320
Variance of the week on £10k= A$220
Major news or data for the week so far
A$- Australia’s current account balance between July and September was worse than expected at A$ -7.8bn. A negative value (current account deficit) means that there is a net capital outflow of income, and transfer payments to and from the country.
A$- 3rd Quarter GDP growth was below expectations and was very weak at just 0.2%. that compares with 1.1% the previous quarter
£/NZD
Range of the week:2.0670-2.10
Variance of the week: on £10k=N$330
Major news or data for the week so far
Better than expected trade data with a smaller deficit than expected and a decent improvement in business confidence.
£/ZAR
Range of the week:10.95-11.15
Variance of the week: on £10k= ZAR2,000
Major news or data for the week so far
Strong manufacturing data released yesterday has supported the Rand.
£/CAD
Range of the week:1.5815-1.6010
Variance of the week: on £10k=C$195
Major news or data for the week so far
C$- Canada’s current account for July-September was in deficit and worse than expected.
C$- GDP growth for September was expected to be +0.1% but came in at -0.1% leading to the Dollar weakening by around 1% yesterday.
