Market Commentary – 31/07/09
Key Themes
The main themes deciding market direction currently are: -
- Signs of stabilisation in the US housing and labour markets and positive economic reports elsewhere add to the bullish mood.
- Investor confidence still improving with renewed risk appetite causing further flows out of USD (this was, however, slightly contradicted by Tuesdays weaker than expected consumer confidence figures out of the UK and US which prompted a move back into US bonds and strengthened the Dollar).
- Ongoing concerns over the UK economy and the government handling of it. This is leading to market concerns that there may be a sterling crisis ahead.
What Happened Yesterday:
- Nationwide Housing Data indicated that UK house prices rose for the third consecutive month, boosting Sterling and helping it strengthen its position against the Euro for the fourth consecutive day. The Nationwide figures showed a rise of 1.3%, following a 1% rise last month – house price dynamics help improve business and consumer confidence in the country.
- Sterling moved over a cent against the Euro, breaking through key levels of support and testing the 0.8500 (1.1765) levels.
- Sterling also reversed two day losses against the Dollar, moving up through the 1.65 levels again.
What to watch for today:
- Continued Sterling strength in this mornings trading, posting further gains against the Dollar
- EURGBP has reversed its early week call and is now seen as a ‘Sell’ as the Pound has gained momentum
- US advance GDP figures released this afternoon, as they are the broadest measure of economic activity and the primary guage of the economies health.
Market Sentiment and Consensus
EURUSD
Today –Buy above 1.4074 to 1.4168 and 1.4198
This week – Cautious buy above 1.4056 to 1.4291 and 1.4338
GBPUSD
Today – Buy above 1.6486 to 1.6588 and 1.6614
This week – cautious buy if it remains above 1.6263 to 1.6588
EURGBP
Today – Sell whilst below 0.8577 to 0.8524 and 0.8502
This week – Buy signal has reversed and opened moves to 0.8535 and possibly even 0.8400
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