UK
The boss of Barclays has insisted he will not resign after staff rigged the key lending rate between banks. And in a letter agreeing to give evidence to MPs, Mr Diamond condemned the inappropriate behaviour of a “small number” of employees who had tried to make profits for their own benefit.As markets awaited the outcome of the EU summit last night trading remained range-bound across the board. The GBPEUR opened the day at 1.2489 reaching a high of 1.2521. Overnight on the back of positive news from the summit we have seen the Euro rally pushing this pair to a low of 1.2380.
GBPUSD Despite some intraday pullbacks, the bullish correction since early June remains alive, and we still see room for additional upside to 1.5780. A risk on environment will be needed to spark this movement and the outcome of the summit last night has provided a good platform to start from. With possible UK quantitative easing ahead Sterling remains vulnerable, any declines are expected to be well supported around 1.5500.
United Kingdom gross domestic product fell by 0.3% in the first quarter of 2012, as was initially estimated following the end of the quarter. The quarter’s GDP was – 0.2% lower than Q1 2011, as opposed to the initial estimation of -0.1%, according to the UK Office for National Statistics.
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WORLDWIDE
EURUSD has completed a healthy 1.6% rebound from a day low yesterday of 1.2419 to a high this morning of 1.2620. A close back above 1.2585 will now be required to accelerate gains through 1.2750 and towards 1.3000. A rumoured ECB rate cut next week could limit the rally.
After 13 hours of talks EU leaders have agreed to use the Eurozone’s planned bailout fund to directly support struggling banks, without adding to government debt. Spain and Italy put pressure on Germany to allow the bailout fund to buy government debt in the markets – a measure to contain borrowing costs. Eurozone leaders agreed to begin implementing the decisions by the 9th July. However, it could take until the end of the year before the new money becomes available.
There is still a lot of detail to clear up, but this should be enough to remove some of the EUR negative positions from the market. Even so, the potential for ECB easing next week may limit enthusiasm for the EUR.
The European Union, the European Central Bank, and the International Monetary Fund will send a team to Greece next week to review the country’s finances, a European Commission spokesman said Thursday. The team will be looking for ways bailed-out Greece can make more savings to meet its budget targets for 2013 and 2014.
The number of US workers filing initial applications for unemployment benefits fell last week but remained high, signalling quiet job growth. Initial jobless claims for US decreased by 6,000 to a seasonally adjusted 386,000 in the week ended June 23, the Labour Department said yesterday.
The Australian and New Zealand dollars climbed for a third day as US economic reports eased concern the world’s largest economy is faltering, boosting demand for higher-yielding assets. The AUD headed for its biggest monthly gain versus its U.S. counterpart since January as traders added to bets the Reserve Bank of Australia will keep rates unchanged next week as long as Europe’s debt crisis doesn’t worsen.
Cyprus will continue to talk with Russia and China about financial assistance even after the Eurozone indicated that it will help the country, President Demetrius Christofis said Thursday.
