IFX Market Report for 01/06/2012

    150 150 Daniel Fountain
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    GBPUSD started trading yesterday at 1.5474, rising to 1.5523 throughout the morning, but lost all its gains when the US markets opened, dropping to 1.5394 which is a level not seen since January. Overnight trade saw the pair drop further and is currently trading around 1.5280.
    Sterling continued to trade within a tight range against the euro beginning the day at 1.2474 and closing around 70 pips off where we started at 1.2457. Again, sterling has struggled during overnight trading and this morning GBPEUR has opened around 1.2422.GBPUSD has quickly returned to the spotlight with a 5.1% drop through May and a 1.8% tumble just over the past three trading days. Risk aversion has become a common sight, but Cable’s performance stands out even further through Thursday’s session because the remaining majors were relatively steady while other sentiment reads (like the Dow Jones Industrial Average) levelled out. As the saying goes, the nail that sticks out furthest is hammered down. GBPUSD may have over-run the market’s tolerance or it could prove the leader for a broader trend. The future we choose could very well depend on what happens with Friday’s US Nonfarm Payrolls.

    UK Manufacturing PMI for May came in below expectations at 45.9 from the forecast of 49.8.


    US Prelim GDP q/q came out as expected at 1.9%, a relatively positive figure which led to GBPUSD dropping back to 1.5477 from 1.5504 directly after the release.

    The weekly number of individuals who filed for unemployment in the US increased and consumer spending came out at +2.7% vs. +2.9% in the advanced report with corporate profits growing at the slowest pace in three years.

    Thursday morning trade saw the EURUSD continue to test 1.24, but by mid-afternoon we saw it break through support and moved into a new 2 year low overnight at 1.2321, this morning we are trading around 1.2350 and a test of support around 1.23 is expected over today’s session.

    IMF Deputy MD Nemat Shafik has said the 2013 deadline for euro zone countries to bring budget deficits below 3% may have to be postponed which is exactly what Spain had agreed on Wednesday.

    Ireland began casting ballots on Thursday for what will be their Third referendum in four years on Europe, with opinion polls pointing to a “yes” vote that could ease concerns about its funding prospects and save Europe a headache it can do without.

    A New Greek opinion poll published this morning showed the anti-bailout SYRIZA party lead with a six-point lead over their conservative pro-bailout rivals ahead of a key election on June 17.

    Euler Hermes SA the world’s biggest credit insurer, said it will no longer cover new shipments of goods to Greece because of the risks attached to the nation leaving the Euro currency and customers defaulting on payments
    Japan’s Finance Minister Jun Azumi pledged to take “decisive” action if excessive gains in the currency persist. Ironically, after his comments the Yen gained around 1.5% versus sterling. GBPJPY has declined over 7.5% in May, from 130.60 on May 2nd to trade this morning at 120.44 which is close to a four month low. EURJPY moved to a low of 96.68, a level that hasn’t been seen for over 12 years.

    Australian Building Approvals for April came out well under forecast at -8.7% against a predicted 0.3%. This was following a rise of 6% in March meaning approvals were down 24.1% for the year ending April.

    Swiss Retail sales were released almost flat this morning, rising 0.1% in April, this figure is very disappointing in comparison with the 4.7% growth registered the previous month.

    Daniel Fountain / 31.05.2012

    Editor, Hotel Designs


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