UK
Sterling made gains against euro throughout Friday’s session, opening at the low of 1.2525 to reach a 3 and a half year high of 1.2607 as investors concerned about the debt crisis cut their exposure to the Eurozone.GBPUSD fell to a 1-week low of 1.5472 from the 1.5550 high, this was helped along by positive data from the US labour market. This break should open up support targets around the 1.5400 level. Traders are looking for a close above 1.5550 for any potential upside, strong resistance should contain the pair below 1.5700.
The prices charged by UK manufacturers fell by 0.4% from May to June – the biggest fall since November 2008, a strong signal that UK inflation will continue to fall in the short term.
BOE Deputy Governor Paul Tucker gets the chance today to testify on the Libor scandal that cost Barclays top three managers their jobs and cast doubt on his prospects of succeeding Mervyn King.
________________________________________
WORLDWIDE
The EURUSD touched a two-year low amid concern an ECB cut in interest rates to a record low won’t be enough to stem the euro bloc’s debt crisis. The move was tempered by speculation the Fed may take further steps to boost growth, including a third round of QE. Analysts are looking towards the US central bank two-day policy meeting on July 31 for a clear outline on further easing policy.
It is expected to be announced this week that the US trade deficit narrowed in May as falling crude oil prices and weakening demand helped trim the import bill.
EURUSD fell from the high of 1.24 to 1.2296 during Friday afternoon trading, falling through support at 1.2298. EURUSD is set for further declines after breaking to a 2-year low. Given the current momentum, the next target is around 1.2150. A short correction of this decline could be triggered if the pair break upside barriers at 1.2352.
The IMF Managing Director Christine Lagarde said they are reducing their estimate for global growth this year on weakness in investment, jobs and manufacturing in India and China.
Italy\’s government has approved a further €4.5bn in spending cuts to the public sector in order to delay a new tax increase until late 2013.
On Friday Nonfarm Payrolls in the US for June improved to 80K from the 77K previous but fell short of the 90K forecast, also US unemployment met projections and held firm at 8.2%.
EURUSD, GBPUSD and GBPJPY continued to track each other very closely in a display of safe haven currency behaviour in a high risk market. US dollar and Japanese yen continue to attract the investors in times of stress in the global markets.
European finance ministers are set to vote today on the new head of the Eurogroup, ahead of Jean Claude Juncker\’s departure on July 17.
Canada saw positive employment data for June on Friday; the unemployment rate saw a marginal improvement with 7.2% against the 7.3% previous and the net change in employment came in at 7.3K down from the previous 7.7K. The Canadian dollar has strengthened against sterling in July, moving from 1.6050 to a low of 1.5710 – the pair is currently trading at 1.5798.
China released it’s consumer price indices this morning at 2.2, which not only fell drastically from the 3.0% previous but also fell short of the 2.3% consensus.
