IFX Market Report for 24/04/2012

    150 150 Daniel Fountain
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    In early trading yesterday USD held firm against GBP’s rise above 1.61; however, following talks by MP member Fisher, GBPUSD moved back to a high of 1.6134 and has since this morning traded up to the resistance at 1.6150. The upside target to close above is still 1.6165.
    GBPEUR began the day at 1.2214 before sterling gained to 1.2271 at 4pm as the market digested economic information released from the Eurozone. Markets this morning have opened around 1.2255.
    The FTSE lost 2% following worries within the Eurozone and investor flight to the safety of German bonds.

    The level of mortgage lending to first time buyers has risen by 30% from February. Lending ending rose to £13.4bn from £10.3bn in February, and from £11.4bn a year ago.

    The BoEs quarterly report shows an increase in cost of borrowing for businesses. These costs are broadly linked to an increased risk of default, and higher wholesale funding tariffs.

    UK public sector net borrowing was expected to have increased to £15.0bn from February’s figure of £9.9bn. The actual figure was over £15.8bn.

    French, German and Dutch governments face a backlash for their austerity measures. The Stoxx Europe 600 index sank 2.3% on disappointing European data.

    The composite output index of French Business shows a shrinking of output to 46.8 in April from 48.7 in March. Markit Economics suggest that that this drop was led by a slump in the French services sector

    The ECB has said there is no chance of the issuance of joint obligation Euro Bonds because Germany would not support it.

    Credit rating agency Moodys have warned Holland that the collapse of their current government would threaten their AAA credit rating.

    In the absence of any notable USD data yesterday, EURUSD traded between a closer range of only 42 points between the high and the low of the European trading session. Trading from 1.3143 and 1.3101 and closing the session at 1.3131 yesterday. EURUSD has opened significantly higher this morning and already tested resistance levels at 1.3181.

    German exports rose 2% in Q1 whilst imports declined. This leads to expectations of a trade surplus. The Deutsche Bundesbank says that whilst the economy is in good health, it lacks momentum.

    According to ANZ analysts, it is now certain that the Royal Bank Australia will cut interest rates. Following a 0.1% rise in CPI and core inflation the question now is whether the RBA will cut by 50 basis points immediately or strategically cut by 25 this month and 25 next.

    AUD lost 2 cent overnight. GBP has risen from a price of 1.5537 at the start of the week and peaked overnight at 1.5694.

    25th April is a bank holiday in both for NZD and AUD

    Daniel Fountain / 23.04.2012

    Editor, Hotel Designs


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