Market Commentary 23/07/09
Key Themes
The main themes deciding market direction currently are: -
MPC View that downside risks to growth have diminished.
Decision by BoE to hold Quantative easing at current level £125bn.
The continuing strength of equities. This has stemmed demand for the USD.
In the News
After the release of the MPC minutes from the most recent meeting sterling recovered from it’s early trading down to finish the day approaching 1.65.
Analysts said the tone of the minutes was one of ‘wait and see’ but one where there was notable improvement in sentiment.
Tuesday Technical Trading
GBPUSD – Gained on the back of improved sentiment closing the day at the relative high of recent range at 1.65 area
EURGBP – EUR moved lower on the back of sterling strength towards 0.86 support.
GBPCHF – Gained ground and now holding above 1.7550 level
GBPJPY – Improved and now pushing comfortably above congestion at 154.00
EURUSD – Along with sterling the EUR gained against the USD and moved and held above 1.4200
Data released today
Thursday 23rd July
9.30am GBP Retail Sales (Forecast at 0.4%)
Measures – Change in the total value of inflation-adjusted sales at the retail level
Why Note – It’s the primary gauge of consumer spending, which accounts for a majority of overall economic activity
Usual Effect – If the actual number is higher than forecast then this is seen as good sign for GBP
1.30pm USD Unemployment Claims (Forecast at 551k)
Measures – The number of individuals who filed for unemployment insurance for the first time during the past week
Why Note – the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor conditions
Usual Effect – If the actual number is higher than forecast then this is seen as good sign for USD
3.00pm USD Existing Home Sales (Forecast at 4.82m)
Measures – Annualized number of residential buildings that were sold during the previous month, excluding new construction
Why Note – It’s a leading indicator of economic health because the sale of a home triggers a wide-reaching ripple effect.
Usual Effect – If the actual number is higher than forecast then this is seen as good sign for USD
Market Sentiment and Consensus
EURUSD
This week – expected higher as long as it doesn’t trade below 1.3963
Today – expected higher as long as it doesn’t trade below 1.4197
GBPUSD
This week – expected flat in the range of 1.6222 to 1.6481.
Today – expected flat in the range of 1.6423 to 1.6510
EURGBP
This week – expected higher as long as it doesn’t trade below 0.8535
Today – expected flat in the range of 0.8618 to 0.8661
