Pound down vs. euro despite lack of data

The pound lost ground to the single currency yesterday for the second consecutive day, losing a further 0.23 cents in value.

• Trading remained in a tight range throughout the day as the pound gradually lost some value.
  
• There was a lack of first tier economic data released in both the UK and the eurozone yesterday – however the International Monetary Fund did warn the UK government that they need to bring in clear policies to control the public finances.
  
• The FTSE 100 continued its recent upwards curve finishing the day 0.35% higher. The blue chip index is now up 5.7% on the week and is set for its best weekly performance in 4 months.
  
• Global equity markets have enjoyed a good week following US corporate earnings being released – JP Morgan was the latest heavyweight to release better-than-expected earnings in the second quarter.
  
• There is little data out of the UK today, whilst trade balance figures are released in the eurozone today.

Sterling gains vs. US Dollar after bank's results

Sterling experienced choppy trading against the US dollar yesterday, but finished little changed to close the day at $1.6438.

• The pound lost a little ground to the US dollar early yesterday morning, but made sharp gains later on as very strong results from JPMorgan reinforced previous earnings figures from Goldman Sachs and boosted hopes for a US recovery.
  
• The corporate earnings figures from JPMorgan undermined demand for safe haven currencies such as the US dollar, allowing the pound to stage a rally.
  
• However, sterling lost much of its gains yesterday evening, after the Philadelphia Fed Survey revealed a drop in the US manufacturing sector.
  
• The pound has continued to fall broadly this morning, as recent optimism gives way to worries about the corporate earnings figures from Citigroup and Bank of America, both due later today.

Euro gains vs. USD after JPMorgan results

The euro strengthened against the US dollar yesterday by 0.39 cents (0.28%) to close the day at $1.4146.

• The single currency strengthened against the greenback yesterday as global equity markets continued their recent rally, boosting risk appetite. The Dow eventually finished the day up 95.61.
  
• Surprisingly positive results from investment banking giant JPMorgan Chase was the primary driver behind these gains, following stellar quarterly profits announced by Intel and Goldman Sachs earlier this week. JPMorgan Chase unveiled bumper revenues of $27.7 billion in the three months to the end of June, with earnings rising $2.7 billion in the quarter.
  
• In addition, better-than-expected US unemployment claims data, which came in ahead of forecast at 522k this month, further boosted the single currency.
  
• However, US TIC Long-Term Purchases data released mid-afternoon capped the euro’s gains in late trading as investors worried the global economic recovery may still be some way off. This month’s reading of -$19.8 billion was well below the £16.7 billion forecast by analysts.
  
• There are no major announcements due in the eurozone today, whilst in the US Building Permits and Housing Starts data is out at 13.30 BST.

Pound down as risk appetite improves

The pound lost around half a cent to the Australian dollar yesterday to finish the day at 2.0384.

• The pound lost ground to the Australian dollar yesterday morning, as higher yielding currencies such as the aussie got a boost from strong corporate earnings figures from JPMorgan.
  
• The Australian dollar continued to post gains against sterling yesterday evening, as Wall Street closed 1.11% up following the investment banking giant’s results.
  
• However, the Australian dollar lost ground overnight when data revealed a record fall in Australian export prices for the second quarter. The 20.6% slump raised concerns that trade could be a bigger problem for the economy than expected.
  
• Bomb blasts which ripped through two hotels in Jakarta overnight, killing at least 9 people and injuring 42, also undermined the Australian dollar, as the news prompted some investors to pare riskier trades.
  
• Markets now await corporate earnings figures from Citigroup and Bank of America, both due later today.

Sterling up after Fitch NZ downgrade

The pound rose against the kiwi dollar yesterday after a ratings agency raised concern over New Zealand’s finances.

• Ratings agency Fitch downgraded its outlook for New Zealand from stable to negative yesterday, reducing investor appetite for the kiwi dollar. Its fall came despite the agency reaffirming the country’s AA+ sovereign credit rating.
  
• Strong equity market performance also buoyed investor appetite for the pound, with the FTSE 100 eventually finishing the day up 15.38.
  
• So far today, the kiwi has strengthened against sterling despite news of two explosions in Jakarta overnight generally reducing risk appetite in the market.