IFX Market Report for 31/07/2012

    150 150 Daniel Fountain
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    GBPUSD had a quiet day on Monday, trading sideways for most of the data light day, with the pair opening at a high of 1.5730 to end up at 1.5711 by the close of play. GBPEUR followed Monday morning’s return from 1.2698 after Friday’s volatile trading with GBP making a steady gain against the single currency to trade to a high of 1.28300 before settling at 1.2815.

    GfK UK consumer confidence was unchanged this month as efforts by the government and the Bank of England to pull the economy out of a recession failed to lift sentiment. An index of sentiment stayed at minus 29.

    Focus for the week moves to the BOE interest rate and asset purchase decision on Thursday, as analysts look for the Bank of England’s next move.


    EURUSD opened at 1.2302 and gained ground in the early session against the dollar, although remaining range bound. The pair finally finished back down towards 1.2259 after belief in the recent bullish comments from Mario Draghi faded.

    The Italian 10y bond auction held yesterday tipped the downtrend for EUR against the majors. The auction finished with a yield of 5.96%, below the previous of 6.19% however traders remained sceptical owing to the timely release of the statements by the ECB, EFSF and ESM.

    The ratings agency S&P revised its estimate for the Eurozone economy forecasting a contraction of 0.6%, from its earlier forecast of zero growth. It also cuts its forecast for 2013 suggesting the area would grow only 0.4%, down from 1.0% previously.

    Today the FOMC starts its two day meeting to consider how to boost the economy; the markets will be looking for hints of a next round of QE from the Federal Reserve.

    With the US earnings season well underway, risk sentiment moved to the US equity markets although markets seemed to be holding their breath ahead of meetings by both the Fed and the ECB.

    EURSEK was the largest mover across the majors, with the pair moving -1.47% opening at 8.4561 and trading down to 8.3174 owing to a positive Swedish GDP figure yesterday, 1.4% q/q vs market and Riksbank forecast of 0.2% q/q.

    This morning German retail sales fell slightly in June, defying expectations for an increase in adjusted terms, sales fell 0.1% on the month, after falling 0.3% in May. It was the third straight month of falling sales. In yearly terms, sales were up 2.9%.

    Daniel Fountain / 30.07.2012

    Editor, Hotel Designs


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