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

Market Commentary – 30/07/09

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:

• Mortgage approvals for house purchases in the UK hit their highest level in more than a year in June, although total consumer lending rose by the smallest amount on record.
• Orders for US durable goods fell more than forecast in June, the first decrease in 3 months. Excluding transport figures, however, demand for goods unexpectedly rose signalling manufacturing may expand in the second half of the year.
• Consumer prices in Germany posted their first annual decline in more than 22 years in July, with energy and food prices falling and the recession curbing spending.
• EURGBP broke out of it’s recent trading range and below the pschological 0.8600 level
• GBPUSD fell to around 1.6343 before posting gains in early Thursday trading

What to watch for today:

• Sterling strength off the back of positive housing data released this morning. The Nationwide survey showed house prices have risen for the thrid consecutive month and the Pound has been strong in early trading.
• EURGBP has broken out of its weekly range, and could fall further to 0.8535, 0.8509 and then 0.8400
• US unemployment claims released at 13.30 as it is seen as an important indicator of the economies overall health and correlates with consumer spending.
• GBPUSD has already broken through early technical levels and continues to strengthen

Market Sentiment and Consensus

EURUSD


Today –Flat, in the range of 1.4005 to 1.4109.

This week – Cautious buy above 1.4056 to 1.4291 and 1.4338

 GBPUSD


Today – Already broken through the initial ‘flat’ call, buoyed by Nationwide housing data. Now seen a buy, citing 1.6513 and 1.6559

This week – cautious buy if it remains above 1.6263 to 1.6588                  

EURGBP


Today – Cautious sell  to 0.8509 after it has moved below the initial support in early trading. 

This week – cautious buy whilst above 0.8572 to 0.8694 and 0.8756. Sell whilst below 0.8572 to 0.8509.

Market Commentary 29/07/09

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.

In the News

US Stocks fell and the S&P 500 retreated from an 8 month high as consumer confidence figures in the US came in below expectations, a second monthly fall in a row. 

London equities continued to ease back following news of sharply lower profits, in particular at BG Group.

Asian Stocks fell for the first time in 12 days as lower commodity prices and disappointing profit reports raised concern the recent rally has made equities expensive relative to earnings prospects (source: Bloomberg).

The RBA have signalled they may look to raise interest rates as they have seen a recovery in the economy, boosting the AUS against a basket of currencies.

Core Data released today

Wednesday  29th July

13:30 – US Core Durable Goods Orders, m/m      Exp 0.1%

Seen as a leading indicator of production – rising purchase orders signal the manufacturers will increase activity.

(NOTE: While better than forecast figures are usually good for the Dollar, current market conditions mean the reverse tends to be true as investors take refuge in US bonds) 

Market Sentiment and Consensus

EURUSD


Today – Sell whilst below 1.4216 to 1.4130. 25% chance of breaking above 1.4268 then 1.4306.

This week – Cautious buy above 1.4056 to 1.4291 and 1.4338

 GBPUSD


Today – Cautious sell to 1.6310 and 1.6263 after it dropped below 1.6382, but expect increased volatility.

This week – cautious buy if it remains above 1.6263 to 1.6588                  

EURGBP


Today – flat, although cautious buy if it breaks through 0.8648 to 0.8667 and 0.8688

This week – cautious buy whilst above 0.8572 to 0.8694 and 0.8756.

Market Commentary – 28/07/09

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.

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.

In the News

European stocks climbed to an 8 month high after company earnings continued to beat analysts estimates. Asian shares also rose, indicating further investor confidence and risk appetite.

US Treasury Secretary Timothy Geithner has pledged to rein in the US deficit amid China’s concerns about preserving the value of their $800bn of Treasury holdings. Geithner has promised a “sustainable” deficit by 2013.

 

Data released today

Tuesday  28th July

UK – 11:00  CBI Realised Sales – Exp. -12

This is a survey of around 160 retail and wholesale companies rating the current level of current sales volume, and isseen as a leading indicator of consumer spending. 

US – 15:00 CB Consumer Confidence – Exp. 49.1

Financial confidence is a leading indicator of consumer spending, which in turn accounts for a majority of overall economic activity.

Market Sentiment and Consensus

EURUSD


Today – Cautious buy whilst above 1.4218 to 1.4299. 30% of breaking below 1.4338 to 1.4171 and 1.4144.

This week – expected higher as long as it doesn’t trade below 1.4056

 GBPUSD


Today – Cautious buy whilst above 1.6455 to 1.65265, and above this to 1.6588.

This week – expected higher as long as it doesn’t trade below 1.6263                   

EURGBP


Today – Cautious buy above 0.8610 to 0.8661 and 0.8694

This week – expected higher as long as it doesn’t trade below 0.8572

Market Commentary

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.

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.

In the News

Deloitte’s latest review says that the economy will grow 0.5% next year and 1.5% in 2011 hinting that the UK recovery will be ‘U’ shaped at best.

Economists warn that quantative easing has only one week left to run as the process has already passed £120bn and is now nearing the MPC’s target figure of £125bn.

UK output shrank 0.8pc between April and June – far worse than the average 0.3pc slump predicted by City economists. All parts of the economy – apart from the public sector – are now in recession.

Monday Technical Trading

GBPUSD – A week of tight range trading being driven on a temporary basis by the daily news and data. Now waiting for a break above 1.6550 or below 1.6350

EURGBP – EUR is still continuing to strengthen against GBP in the longer term and is now holding above 0.8600

GBPCHF – Finished firmly in the middle of the weekly range at 1.7600 area. Looking for a break above 1.7750 or below 1.7450

GBPJPY – Traded higher on the week on the back of JPY weakness. Holding above 156.00 will signal a move higher.

EURUSD – After a volatile week with no clear direction the pair finished trading firmly in the middle of the weeks range at 1.4200

Data released today

Monday  27th July

3.00pm  USD  New Home Sales

Measures  – Annualized number of new single-family homes that were sold during the previous month

Why Note  – It’s a leading indicator of economic health because the sale of a new 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 1.4056

 GBPUSD


This week – expected higher as long as it doesn’t trade below 1.6263                   

EURGBP


This week – expected higher as long as it doesn’t trade below 0.8572

Market Commentary 24/07/09

Key Themes


The main themes deciding market direction currently are: –

Increasing risk appetite is continuing to push investors away from the safe haven of USD and JPY.

MPC View that downside risks to growth have diminished.

Decision by BoE to hold Quantative easing at current level £125bn.

Short term positive sentiment on the back of economic data.

In the News

Positive news for equities as the FTSE 100 passed the 4500 level and the Dow closed above 9000.

Retail sales figures came in better than forecast, which has led to hopes of a potential positive upturn in the economy. High street sales rose by 1.2% in June ahead of analysts’ forecasts of a 0.3%rise.

Thursday Technical Trading

GBPUSD – Volatile range trading ended with the pair still holding above 1.6500

EURGBP – Positive GBP moves saw a break below 0.86 although this is struggling to hold.

GBPCHF – Broke above resistance and held above at 1.7700

GBPJPY – Continuing strength along with JP weakness is seeing the pair hold above support at 156.50

EURUSD –  Strong trading in the early US session led to the pair closing the reaching a high of 1.4291. These gains were more than given back in the late US session when in volatile trading it recorded a low of 1.4118

Data released today

Friday 24th July

9.00am   EUR  German Ifo Business Climate (Forecast at 86.6)

Measures  – Level of a composite index based on surveyed manufacturers, builders, wholesalers, and retailers

Why Note – This survey is highly respected due to its large sample size and historic correlation with German and wider Eurozone economic conditions. It tends to create a hefty market impact upon release

Usual Effect  – If the actual number is higher than forecast then this is seen as good sign for EUR

9.30am  GBP  Preliminary GDP (Forecast at -0.3%)

Measures – Change in the inflation-adjusted value of all goods and services produced by the economy

Why Note – It’s the broadest measure of economic activity and the primary gauge of the economy’s health

Usual Effect – If the actual number is higher than forecast then this is seen as good sign for GBP

3.30 pm  USD  Fed Reserve Chairman Testifies

Usual Effect – If views expressed are more hawkish than expected this is seen as a good for USD

Market Sentiment and Consensus

EURUSD


This week – expected higher as long as it doesn’t trade below 1.3963  

Today – expected to trade in the range of 1.4135 to 1.4214

 GBPUSD


This week –  expected flat in the range of 1.6222 to 1.6481.                   

Today – expected to trade in the range of 1.6455 to 1.6537

EURGBP


This week – expected higher as long as it doesn’t trade below 0.8535    

Today – expected higher as long as it doesn’t trade below 0.8570

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

Market Commentary 22/07/09

Key Themes


The main themes deciding market direction currently are: –

The continuing strength of equities. This has stemmed demand for the USD.

China holding record reserves of USD. Could lead to USD weakening as China seeks to balance its foreign currency reserves.

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.

In the News

In delivering testimony to the US congress yesterday, Federal Reserve chairman Ben Bernanke expressed views that US unemployment was set to remain high until 2011. So it is not the right time for “exit strategies” such as raising interest rates or withdrawing the huge stimulus used to boost the American economy.

Sterling lost ground after government released figures that showed its borrowing rose another £13bn in June. The cash eaten up by interest payments on Government debt will more than double in the next four years as investors take fright at Britain’s ballooning budget deficit. Almost 9p of each £1 in tax will be needed to pay the interest on the debt.

Tuesday Technical Trading

GBPUSD –  Slipped back against the USD towards the 1.64 level on the back of poor economic views. Next resistance is at 1.6320 and then 1.6270

EURGBP –  EUR moved higher against GBP on the back of sterling weakness comfortably holding above 0.8600 confirming the 3 month trend higher

GBPCHF – Moved lower and once again and is now to test support at 1.7470

GBPJPY – Slipped back against the JPY. Now looking to test recent lows at 152.50

EURUSD –  Posted a new recent high at 1.4270 but sold off in the US session as money flowed back into the USD. AT the close of European trading it was trading below the 1.42 level

Data released today

Wednesday 22nd July

9.30am            GBP            MPC Meeting Minutes

Records – The breakdown of the MPC members votes with regard to how many voted to increase, decrease or hold current interest rates

Why Note – It provides in-depth insights into the economic conditions that influenced their vote on where to set interest rates, and offering clues on the outcome of future votes

Usual Effect – If the record is more hawkish than expected this is seen as a good sign for the GBP

3.00 pm            USD             Fed Reserve Chairman Testifies

Usual Effect – If views expressed are more hawkish than expected this is seen as a good for USD

Market Sentiment and Consensus

EURUSD


This week – expected higher as long as it doesn’t trade below 1.3963  

Today – expected to trade in the range of 1.4163 to 1.4245

 GBPUSD


This week – expected flat in the range of 1.6222 to 1.6481.                   

Today – expected lower as long as it doesn’t trade above 1.6461      

EURGBP


This week – expected higher as long as it doesn’t trade below 0.8535    

Today – expected higher as long as it doesn’t trade below 0.8631

Market Commentary 21/07/09

Key Themes


The main themes deciding market direction currently are: –

The continuing strength of equities. This has stemmed demand for the USD.

China holding record reserves of USD. Could lead to USD weakening as China seeks to balance its foreign currency reserves.

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.

In the News

Yesterday saw a continuation of movement away from the USD with the dollar posting a six week low against the EUR. The commodity currencies of AUD and CAD were once again the strongest as the appetite for risk continued its theme. There appear to be some genuine concerns for the health of sterling being expressed.

Speaking in the Telegraph, Neil Woodford, the head of Investment at Invesco Perpetual said,  “With the issues that combined to create the current severe recession unresolved, I do not believe that the ingredients are in place for recovery to begin. In addition to the structural problems in the financial sector, the rebuilding of personal and corporate balance sheets has yet to begin in any meaningful way and having been out of balance for so long, this too will be a drawn out process.”

Monday Technical Trading

GBPUSD – Continued to climb against the USD on the back of Dollar weakness. Posting a high of 1.6556. It would appear likely that we would now have a move back down away from the top of this recent range

EURGBP – GBP strengthened against the EUR yesterday however only back down as far as the 0.8600 support and now appears the EUR would continue higher.

GBPCHF – Moved higher but is now beginning to retreat again

GBPJPY – Moved higher to 156.40 but is now retreating again.

EURUSD – Posted a six week high at and is now holding above the 1.4200 area

Data released today

Tuesday 21st July

3.00 pm            USD             Fed Reserve Chairman Testifies

Usual Effect  – If views expressed are more hawkish than expected this is seen as a good for USD

Market Sentiment and Consensus

EURUSD


This week – expected higher as long as it doesn’t trade below 1.3963  

Today – expected to trade in the range of 1.4145 to 1.4250

 GBPUSD


This week – expected flat in the range of 1.6222 to 1.6481.    

Today – expected lower as long as it doesn’t trade above 1.6560      

EURGBP


This week – expected higher as long as it doesn’t trade below 0.8535    

Today –  expected higher as long as it doesn’t trade below 0.8576

Market Update 20/07/09

Key Themes


The main themes deciding market direction currently are: –

Positive US corporate earnings and improved economic data has improved risk appetite away from the USD and JPY.

China holding record reserves of USD. Could lead to USD weakening as China seeks to balance it’s foreign currency reserves.

IMF concern over UK government handling of the economy. This is leading to a very cautious view of the Pound.

In the News

The data last week was mixed with positive earnings in the US driving risk appetite. The jobless figures in the UK and US continued to rise however and this is still leading to a very cautious view on the overall economic situation.

Last Week Technical Trading

GBPUSD – With the USD weakening last week has moved into the middle of the range that has been active since mid June. In the short term watch with caution any move below 1.6260 or above 1.6480

EURGBP – EUR has been climbing against GBP since mid June. Having now broken and held above 0.8600 a move higher looks likely.

GBPCHF – Moved lower last week although didn’t break through low support

GBPJPY – Moved strongly higher last week by 5 big figures. The break higher of 155.00 is a strong sign.

GBPAUD – AUD strength has held against GBP and is now trading at the support level that has been in place since mid June

GBPCAD – Moved significantly lower by 6 big figures as appetite for the commodity currencies increased. Next support at 1.8100 level

EURUSD – Moved steadily higher last week. Now trading at 1.4170. Next resistance comes at 1.4200.

Data released today

Monday 20^th July

No major data releases today

Market Sentiment and Consensus

EURUSD


This week – expected higher as long as it doesn’t trade below 1.3963   

GBPUSD


This week – expected flat in the range of 1.6222 to 1.6481      

EURGBP


This week – expected higher as long as it doesn’t trade below 0.8535