The euro strengthened against the US dollar by 1.51 cents (1.11%) yesterday, finishing the day at $1.3779.
• In early trading, the euro strengthened against the dollar as improved risk sentiment in the market stoked demand for riskier currencies.
• News that a strong euro had not been a concern among European finance ministers further extended the single currency’s gains yesterday lunch. Portuguese Finance Minister Fernando Teixeira dos Santos’s comments sent the single currency into positive territory after he said the European Union was not concerned about the strength of the single currency.
• Strong performance from European equity markets also stoked the euro’s gains as investors looked to the riskier single currency, and away from the perceived safe-haven of the dollar.
• The dollar plunged in late trading yesterday afternoon after US Treasury secretary Tim Geithner said the financial system was “starting to heal” following a period of severe trauma. His comments further stoked investor confidence that a global economic recovery may tentatively be underway, with riskier currencies like the euro benefitting as a result.
Thursday 21 May 2009
Pound on course for biggest monthly rise vs. USD since 1993
The pound continued to strengthen against the US dollar yesterday, rising 2.79 cents (1.8%) to finish the day at $1.5754.
• In early trading, sterling resumed its rise against the greenback as risk aversion in the market continued to diminish, prompting investors toward riskier assets.
• The pound continued its climb following the release of Bank of England minutes. They showed the MPC unanimously agreed to expand the bank’s asset purchase program by a further £50 billion, although a £75 billion extension was discussed. The fact there were no unpleasant surprises was greeted with relief on the markets.
• Meanwhile, figures released by the Confederation of British Industry showed UK manufacturing orders fell slightly more than expected last month but firms were more upbeat about the future than at any time since last September. This news further extended sterling’s gains.
• A move beyond sterling’s 200-day moving average of $1.5550 – a key technical level – further extended its gains yesterday afternoon.
• Finally, in late trading, comments from US Treasury secretary Tim Geithner that the financial system was “starting to heal” after a period of severe trauma further increased investor appetite for riskier currencies like the pound. His announcement boosted confidence that the worst of recession had passed, tempering safe-haven demand for the dollar.
• The pound has risen 5.6% against the greenback so far this month, leaving it on course for its biggest monthly rise since 1993.
• The pound’s rise has continued in trading so far today as general risk aversion continues to wane in the market.
• In early trading, sterling resumed its rise against the greenback as risk aversion in the market continued to diminish, prompting investors toward riskier assets.
• The pound continued its climb following the release of Bank of England minutes. They showed the MPC unanimously agreed to expand the bank’s asset purchase program by a further £50 billion, although a £75 billion extension was discussed. The fact there were no unpleasant surprises was greeted with relief on the markets.
• Meanwhile, figures released by the Confederation of British Industry showed UK manufacturing orders fell slightly more than expected last month but firms were more upbeat about the future than at any time since last September. This news further extended sterling’s gains.
• A move beyond sterling’s 200-day moving average of $1.5550 – a key technical level – further extended its gains yesterday afternoon.
• Finally, in late trading, comments from US Treasury secretary Tim Geithner that the financial system was “starting to heal” after a period of severe trauma further increased investor appetite for riskier currencies like the pound. His announcement boosted confidence that the worst of recession had passed, tempering safe-haven demand for the dollar.
• The pound has risen 5.6% against the greenback so far this month, leaving it on course for its biggest monthly rise since 1993.
• The pound’s rise has continued in trading so far today as general risk aversion continues to wane in the market.
Sterling strengthens against the single currency
The pound strengthened against the euro by 0.8 cents (0.7%) yesterday, finishing the day at 1.1430.
• In early trading, the pound strengthened against the single currency as pessimism surrounding the UK economy and financial sector eased.
• Adding to the euro’s early dip was the release of worse-than-expected German producer price data, which showed a 1.4% fall in April from the previous month, the sixth monthly decline.
• The release of Bank of England minutes from their last policy meeting, in which they decided to extend their asset purchase program by a further £50 billion, was greeted with relief on the markets mid-morning after it produced no big surprises. The MPC voted unanimously to expand its quantitative easing although, interestingly, they did discuss the possibility of a £75 billion extension.
• However, by lunch the euro had clawed back all of its early losses against the pound as traders booked profits from the previous day’s gains.
• Comments made by Portuguese Finance Minister Fernando Teixeira dos Santos sent the single currency into positive territory after he said a strong euro had not been a concern among European finance ministers. A pull-back in continental equities from session lows also helped to increase risk demand in the market, with the euro again benefitting as a result.
• A downbeat report released by the International Monetary Fund yesterday afternoon further weighed on the pound after it said any recovery in the British economy is likely to be subdued. It also warned that the UK’s high levels of borrowing and the fragility of its financial sector make it susceptible to potential shocks.
• Nevertheless, in late trading the pound eventually clawed back into positive territory against the single currency, as investors remained wary that the eurozone may still have some way to go before its recession bottoms out, with last Friday’s downbeat GDP figures still weighing on many minds.
• In early trading, the pound strengthened against the single currency as pessimism surrounding the UK economy and financial sector eased.
• Adding to the euro’s early dip was the release of worse-than-expected German producer price data, which showed a 1.4% fall in April from the previous month, the sixth monthly decline.
• The release of Bank of England minutes from their last policy meeting, in which they decided to extend their asset purchase program by a further £50 billion, was greeted with relief on the markets mid-morning after it produced no big surprises. The MPC voted unanimously to expand its quantitative easing although, interestingly, they did discuss the possibility of a £75 billion extension.
• However, by lunch the euro had clawed back all of its early losses against the pound as traders booked profits from the previous day’s gains.
• Comments made by Portuguese Finance Minister Fernando Teixeira dos Santos sent the single currency into positive territory after he said a strong euro had not been a concern among European finance ministers. A pull-back in continental equities from session lows also helped to increase risk demand in the market, with the euro again benefitting as a result.
• A downbeat report released by the International Monetary Fund yesterday afternoon further weighed on the pound after it said any recovery in the British economy is likely to be subdued. It also warned that the UK’s high levels of borrowing and the fragility of its financial sector make it susceptible to potential shocks.
• Nevertheless, in late trading the pound eventually clawed back into positive territory against the single currency, as investors remained wary that the eurozone may still have some way to go before its recession bottoms out, with last Friday’s downbeat GDP figures still weighing on many minds.
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