IFX Market Report for 20/08/2012

    150 150 Daniel Fountain
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    UK News

    GBPUSD remained range bound on Friday posting a high of 1.5738 and a low of 1.5675. As the afternoon progress the pair approached the 1.5668 support level as positive US data helped the dollar. The pound has strengthened over the weekend to open back over 1.57, with no significant data out today the pair is likely to be traded on risk sentiment only, the next key resistance level to watch for is 1.5732 and support still remains a t 1.5668.GBPEUR started the day falling from 1.2720 as the euro continued to strengthen, the pound found support at 1.2690 before comfortably moving above 1.27, finishing at 1.2744 for the day. The pound opened today just over 1.27 with support seen at 1.2694 and resistance on the upside at 1.2758.

    Ratings agencies Moody’s and Fitch have again warned that they may downgrade the UK from triple-A status if government borrowing and debt rose higher than forecast – which looks increasingly plausible

    According to Rightmove, UK home sellers cut asking prices by a record for the month of August after the London Olympic Games and an uncertain economic outlook distracted potential buyers. Average asking prices in England and Wales fell 2.4% from July, when values declined 1.7%, also dropping 1.2 % in London.

    International News

    On Friday in the US, Preliminary Consumer Sentiment, a leading indicator of consumer spending unexpectedly rose to 73.6 against a forecast of 72.5 leading to the US dollar strengthening against most of the majors in afternoon trade.

    EURUSD started the day at 1.2345 and quickly rose to 1.2365 as Spanish bond yields edged lower again to 6.48% helping the single currency. The trend reversed after the US consumer data release and the pair fell to a low of 1.2309 near the end of Friday’s trading. Over the weekend the euro has strengthened to open Monday’s around 1.2350 approaching resistance levels of 1.2380 and 1.2428.

    According to a report by Bloomberg, German Chancellor Angela Merkel seems to be considering relaxing Greek bailout conditions. Lately, Germany has been divided by two opposite poles that may compromise Greece’s future within the Eurozone or lead to further policy easing and growth attempts

    Global share markets continue to confound conventional wisdom and are once again trading up on the day. Resilient share markets often correlate with a weakening off of the safe haven US dollar.

    Canada’s consumer price index advanced 1.3% in July versus a 1.5% gain last month. The Canadian Dollar declined against its US counterpart for the first time in four days to $1.0111 as inflation slowed, adding to evidence the nation’s economy is moving away from full capacity

    Australia’s dollar declined against all of its major peers after the nation’s treasury said the central bank would be able to ease monetary policy if the currency’s gains are hurting the economy. It currently trades at 1.5065 against the pound.

    Emerging nation Brazil has announced plans to indulge in a Keynesian-style demand expansion scheme, which will see over US$60bn spent over the next quarter of a century on the country’s infrastructure.

    This morning, the Leading Economic Index in Japan that shows the performance of the Japanese Economy over the short and mid-term came out at 93.2 compared to a previous figure of 95.2

    Daniel Fountain / 19.08.2012

    Editor, Hotel Designs


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