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  • IFX Market Report for 01/08/2012

    Daniel Fountain
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    UK

    Sterling declined versus all except one of its 16 major counterparts as an industry report showed UK consumer confidence stalled this month as the recession deepened. The pound fell for the first time in four days against the euro after Moody’s Investors Service lowered its forecast for UK economic growth. GBPEUR fell a cent from the Monday night high of 1.2820, starting Tuesday on the back foot, eventually falling to a low of 1.2715.

    GBPUSD performed in a similar manner falling throughout the day to 1.5632, however a late spike in the afternoon sent the pair back up by 0.5 cents to finish the London session around 1.5680.

    All eyes are on the Bank of England interest decision meeting tomorrow lunchtime, most experts believe the central bank are likely to keep its asset-purchase program on hold and leave interest rates unchanged this month, but disappointing second quarter figures released last week may force some members to vote for another round of QE.

    Data from mortgage lender Nationwide released this morning showed UK house prices fell at their fastest annual pace in nearly three years last month, as the effects of nine months of recession spread further across the economy. Nationwide reported a 0.7% decline in house prices in July. Prices are now 2.6% lower than a year ago – their biggest annual fall since August 2009.

    This morning UK Manufacturing PMI figures were published much lower than the expected 48.5. A disappointing figure of 45.4 initially pushed the pound down further, in particular GBPUSD bottomed out at 1.5623 and GBPEUR fell to 1.2704.
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    WORLDWIDE

    Investors are contemplating whether the Fed will increase their asset buying facility and the resilience of Mario Draghi’s pledge to hold the Eurozone together; this helped the euro move upwards against the US dollar from a low 1.2258 to hit a high of 1.2330 late in the European session. Currently EURUSD is trading around 1.2315 and the markets are considering further gains, resistance levels to watch are 1.2331 and 1.2371.

    German retail sales fell slightly on the month in June, defying expectations for an increase, data from the country’s statistics office Destatis showed yesterday morning. In adjusted terms, sales fell 0.1% on the month, after falling 0.3% in May, it was the third straight month of falling sales.

    Germany’s jobless rate increased in July after a fourth straight month-on-month rise in unemployment claims, signalling the labour market in Europe’s largest economy is losing momentum. Germany’s unemployment rate rose to 6.8% in July from 6.6% in June in unadjusted terms.

    Statistics agency Eurostat said the number of unemployed people in the Eurozone collectively rose by 123,000 to 17.8 million in June, the highest level since records for the 17 nations were first compiled in 1995.

    French consumer spending growth slowed in June from May and marked a fall in the second quarter from the first quarter. Household spending in the Eurozone’s second largest economy grew only 0.1% in June from May and was 0.2% higher than June 2011.

    Eurozone governments have turned down Greece’s request for a bridge loan to cover a bond of €3.2bn that matures on August 20, in response to which the government will resort to an increased issue of treasury bills this month.

    An 11-week high in Australian’s stocks and better-than-expected building data gave a boost to the Australian dollar, which climbed to 1.0520 against the US dollar compared to 1.0489 before the news.

    Canada’s gross domestic product grew less than economists predicted in May as a manufacturing decline curbed gains in energy and retailing. Output rose 0.1% to an annualized CAD 1.29 trillion following gains of 0.3% in April and 0.1%in March.

    Daniel Fountain / 31.07.2012

    Editor, Hotel Designs

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