Trading margins are tight on the EUR/CHF currency pairing this morning ahead of the G20 summit and as traders await the European Central Bank’s rate decision at 12.45 BST. Investors expect a cut of 50 basis points to 1%, and are speculating about whether the ECB will announce any quantitative easing strategies like many other central banks have done.
Against the pound the Swiss franc has fallen sharply this morning, reaching a 1-month low as its safe haven appeal has been undermined by rising equity markets and growing risk appetite.
Thursday 2 April 2009
Pound strong against euro on improved risk appetite
The pound enjoyed a successful day against the single currency yesterday, rising above the 1.0900 mark on improved risk appetite. Manufacturing data was released within the UK which was better than expected, standing at 39.1 in March compared to 34.9 the previous month – the level of 39.1 is the best the manufacturing sector has seen since October last year. Many were expecting the reading to be 35, with the fiscal stimulus packages of the previous months possibly taking affect. However, it should be stressed that the reading still lies near historically low levels, and anything less than 50 is within contraction territory. News coming out the eurozone was poor, with the Republic of Ireland revealing that unemployment benefit set a fresh record high last month, with unemployment estimated to be standing at 11%, confirming the serious economic trouble the country is facing.
The pound is continuing to rise against the single currency in early trading this morning, following news that British housing data for March showed the first rise in British house prices since October 2007, according to Nationwide. The building society reported that house prices were 0.9% higher in March compared to a month previously, although they do stress that it is far too early to conclude that the market has turned.
The major news today will surround the European Central Bank’s interest rate decision due at 12.45 BST today. The Caxton FX analysts are forecasting the central bank will cut rates by 50basis points, and of equal importance will be whether there is any indication of quantitative easing. Indeed, yesterday the Director of the International Monetary Fund, Dominique Strauss-Kahn, indicated that the ECB could resort to purchasing assets with newly created money, similar to what is being seen in the UK and US at present.
The UK releases its PMI construction figures this morning, giving an indication of how the sector is fairing at present. Investors will also be looking out for any comments made at the G20 summit today.
The pound is continuing to rise against the single currency in early trading this morning, following news that British housing data for March showed the first rise in British house prices since October 2007, according to Nationwide. The building society reported that house prices were 0.9% higher in March compared to a month previously, although they do stress that it is far too early to conclude that the market has turned.
The major news today will surround the European Central Bank’s interest rate decision due at 12.45 BST today. The Caxton FX analysts are forecasting the central bank will cut rates by 50basis points, and of equal importance will be whether there is any indication of quantitative easing. Indeed, yesterday the Director of the International Monetary Fund, Dominique Strauss-Kahn, indicated that the ECB could resort to purchasing assets with newly created money, similar to what is being seen in the UK and US at present.
The UK releases its PMI construction figures this morning, giving an indication of how the sector is fairing at present. Investors will also be looking out for any comments made at the G20 summit today.
Pound hits 1-week high against the US dollar
The pound made gains against the US dollar yesterday, gaining more than a cent after data showed the rate of decline in British manufacturing eased more than expected in March, a sign that record low interest rates might possibly be having some impact. The dollar was also sold off when a surge in equities lowered demand for the safe haven currency.
Sterling has continued to make gains against the dollar this morning, hitting a 1-week high following data from Nationwide which showed that British house prices rose last month for the first time in 16 months.
Construction figures are due out of the UK this morning, while the US will release jobless claims and factory orders data this afternoon. Analysts will also pay particular attention to the interest rate decision from the European Central Bank today, in addition to any news from the G20 summit.
Sterling has continued to make gains against the dollar this morning, hitting a 1-week high following data from Nationwide which showed that British house prices rose last month for the first time in 16 months.
Construction figures are due out of the UK this morning, while the US will release jobless claims and factory orders data this afternoon. Analysts will also pay particular attention to the interest rate decision from the European Central Bank today, in addition to any news from the G20 summit.
US dollar trades flat against the euro
There was little movement between the euro and the US dollar yesterday, with the dollar strengthening by 0.03 cents to close the day at the 1.3245 level. Trading was kept within tight ranges as investors remained cautious about news from the G20; world leaders are expected to announce an increase in funding for the International Monetary Fund but other developments will also be watched closely.
Data released yesterday showed that eurozone unemployment has jumped to 8.5%, while German retail sales fell by 0.2% in February, which was greater than expected. These poor announcements further supported the view that the European Central Bank will cut the eurozone interest rate from 1.5% to 1.0% today, and as such the single currency has remained under pressure.
In today’s trading the market has remained around yesterday’s close ahead of the ECB’s announcement at 12.45 BST and the accompanying speech from its President, Jean-Claude Trichet. In the US today continuing jobless claims, initial jobless claims and factory orders figures will be released, but the major news investors will be watching for will come from the G20.
Data released yesterday showed that eurozone unemployment has jumped to 8.5%, while German retail sales fell by 0.2% in February, which was greater than expected. These poor announcements further supported the view that the European Central Bank will cut the eurozone interest rate from 1.5% to 1.0% today, and as such the single currency has remained under pressure.
In today’s trading the market has remained around yesterday’s close ahead of the ECB’s announcement at 12.45 BST and the accompanying speech from its President, Jean-Claude Trichet. In the US today continuing jobless claims, initial jobless claims and factory orders figures will be released, but the major news investors will be watching for will come from the G20.
New Zealand dollar remains steady
The New Zealand dollar remained relatively steady yesterday, despite comments from the Reserve Bank of New Zealand that interest rates had got out of line with market expectations. The central bank confirmed that interest rates were likely to remain low for some time. The kiwi will be directed by offshore movements today, particularly the ECB interest rate decision and the G20 summit.
Australian dollar holds its ground
The Australian dollar held its ground against sterling yesterday, as UK manufacturing figures came in stronger than forecast. Data revealed the rate of decline in British manufacturing eased more than expected last month, which caused speculation that the government’s aggressive monetary easing may be starting to take effect. However, investors remained cautious given the overall economic outlook for the shorter term remained bleak. This was reinforced by comments from BoE policymaker, David Blanchflower, who stressed that the UK had yet to feel the pain of rising unemployment. Much of the bad news is already priced into sterling but the turning point for the UK economically still seems a little way off.
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