The pound’s outperformance continued through until the end of the year’s first trading week, taking the price over €1.20 for the first time since September 17th 2010.
On the afternoon of Thursday 6th Caxton FX sent copy to the FT for Saturday publication. The feature discussed whether or not the euro would reach 1.20 in 2011; before close of play Friday the euro had already reached this level. The speed at which the rate rose (4.0% in 4 days!) indicates just how quickly the market is shifting at present. This high level of volatility highlights the importance of regular and accurate analysis - sign-up for daily analysis from Caxton FX.
The question now is, will the rise in the euro continue unabated, or will it reach a plateau? All comments welcome...
Duncan Higgins
Currency Market Analyst
Caxton FX
Friday 7 January 2011
Sterling romps ahead
After a very flat morning, sterling has made significant gains against most of its counterparts following worse-than-expected data from the US.
Despite poor PMI figures earlier in the week, the pound has managed to make up almost four cents against the euro (from €1.1591 on Monday to a high of €1.1970 today) and buck its downward trend against the US dollar.
Following a string of poor results this morning from the eurozone, GBP/EUR remained relatively flat as the market waited for the outcome of the US Non-Farm Payroll. The figure came in some 56,000 below expectation at 103,000. However, the more telling data for the pair may well have been that the unemployment rate fell from 9.7% to 9.4%.
The subdued mornings play suddenly erupted as the Reuters screen froze and refused to give a real number until the market settled down and the computer could catch up. The raging pound then shot up to €1.1969 from just under €1.19 and has spent the past hour yo-yoing up and down before coming to rest around €1.1950. The pound has now risen by almost 5% against the 17-nation currency in only four days.
Although I have waxed lyrical about today’s wild throws of trading, the truth is, as stated in the blogs of the past two days, the single currency is in a dire situation and the market will use any excuse to abuse it.
The poor numbers from across the pond at lunchtime have helped sterling stem its losses against the greenback today. However, this is more than likely to be just a blip. The theme of USD strength is set to continue until the Fed’s second round of QE abates (officially June 2011). Beyond the $600billion injection, it is hard to see exactly what will happen to the dollar, however the likely outcome would be a spell of weakness.
Indeed, JP Morgan has gone so far as to estimate EUR/USD hitting $1.48 by year end. Is this too much of a turnaround? Certainly a turnaround is expected in the latter half of the year as monetary policy in the US stays loose whilst Europe looks too tighten. But surely the debt crisis in the EU is not close enough to a resolution to warrant a move of that level, particularly as the price could drop as low as $1.20.
In other news, well done England on winning their first test series in Australia since 1986. For a good laugh at an Aussie journalist, have a read of this article.
Tom Hampton
Analyst – Caxton FX
For the latest forex news and views, follow us on twitter @caxtonfx and sign up to our daily report.
Despite poor PMI figures earlier in the week, the pound has managed to make up almost four cents against the euro (from €1.1591 on Monday to a high of €1.1970 today) and buck its downward trend against the US dollar.
Following a string of poor results this morning from the eurozone, GBP/EUR remained relatively flat as the market waited for the outcome of the US Non-Farm Payroll. The figure came in some 56,000 below expectation at 103,000. However, the more telling data for the pair may well have been that the unemployment rate fell from 9.7% to 9.4%.
The subdued mornings play suddenly erupted as the Reuters screen froze and refused to give a real number until the market settled down and the computer could catch up. The raging pound then shot up to €1.1969 from just under €1.19 and has spent the past hour yo-yoing up and down before coming to rest around €1.1950. The pound has now risen by almost 5% against the 17-nation currency in only four days.
Although I have waxed lyrical about today’s wild throws of trading, the truth is, as stated in the blogs of the past two days, the single currency is in a dire situation and the market will use any excuse to abuse it.
The poor numbers from across the pond at lunchtime have helped sterling stem its losses against the greenback today. However, this is more than likely to be just a blip. The theme of USD strength is set to continue until the Fed’s second round of QE abates (officially June 2011). Beyond the $600billion injection, it is hard to see exactly what will happen to the dollar, however the likely outcome would be a spell of weakness.
Indeed, JP Morgan has gone so far as to estimate EUR/USD hitting $1.48 by year end. Is this too much of a turnaround? Certainly a turnaround is expected in the latter half of the year as monetary policy in the US stays loose whilst Europe looks too tighten. But surely the debt crisis in the EU is not close enough to a resolution to warrant a move of that level, particularly as the price could drop as low as $1.20.
In other news, well done England on winning their first test series in Australia since 1986. For a good laugh at an Aussie journalist, have a read of this article.
Tom Hampton
Analyst – Caxton FX
For the latest forex news and views, follow us on twitter @caxtonfx and sign up to our daily report.
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