UK News
The pound continued to hold its position against the euro yesterday morning, opening at 1.2758, before jumping sharply to 1.2798 after UK retail figures came out 0.2% better than expected at 2.8% and Eurozone CPI figures were released without surprise. However the pair fell off throughout the afternoon to end up at the support level 1.2757With the major focus now shifting to September and the ECB’s do or die plan for Greece and the single currency, support and resistance levels currently sit at 1.2725 and 1.2820, a break outside of this range could facilitate a sharp move for the pair.
After yesterday’s slight rally against the dollar, and an open of 1.5678, GBP climbed against the greenback trading as high as 1.5743, its highest level since July 30th before closing at 1.5734. The pair sits in a support/resistance range between 1.5671 and 1.5754
BOE MPC member Martin Weale commented the economy is stagnating, but there is an underlying sense of confidence. He also underlined recent bank caution, saying the Eurozone remains the biggest cause for concern.
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International News
The euro strengthened against a basket of currencies yesterday as comments from German Chancellor Angela Merkel backed ECB moves to help reduce borrowing costs, This helped the euro complete five day gains against 16 of its major counterparts.
All eyes in the US will be on today’s release of the Michigan Consumer Sentiment figure, expected to come out inline at 14.55 GMT. With it being the last trading day of the week, a quiet morning for the pair could be overturned late in the session if the figure varies wildly from the 72.2 the market is expecting.
European equity markets edged higher on Thursday after Bloomberg reported that Spain might receive the first, 30 billion euro tranche of the EU banking bailout as soon as by the end of this week, driving risk sentiment across the area.
The late in the day data releases from the US sat in line with market expectation, with only the US Philly Fed Manufacturing Index being the only piece of date outside of its forecasted figure, -7.1 against an expected -5, marking an improvement from the previous -12.5, but still contracting.
Speculation of further policy easing by the Fed, likely to be QE3, moved EUR/USD to higher levels yesterday. Having already edged higher on the day, following the recent mixed housing and labor market data, and dovish comments from Narayana Kocherlakota who is usually on the hawkish side helped the pair found new strength to reach 1.2369 after a continued climb throughout the day’s session.
European equity markets edged higher on Thursday after Bloomberg reported that Spain is likely to receive the first, 30 billion euro tranche of the EU banking bailout as soon as by the end of this week, driving risk sentiment across the area.
Recent data in New Zealand has been giving mixed messages about direction and momentum of the country’s economy. Last week’s HLFS employment report was on the soft side, as was card-spending data. Moreover, this week’s Q2 retail sales data was strong showing a 1.3% bounce from the -0.6% recorded in Q1. As a result, the market now prices close to a 50% chance of a 25bps RBNZ cut by year-end.
