IFX Market Report

Submitted by qrops on Mon, 01/Mar/2010

IN THE UK

 

  • GBP/USD falls to fresh 9 month low
  • Sterling briefly rises after stronger 4th Quarter GDP data.
  • Sterling stays pressured on weak UK outlook

 

IN THE US

 

  • Dollar rises after 4th Quarter GDP data
  • Oil rebounds on weaker dollar
  • Gold prices rise as dollar declines

 

IN THE EU

 

  • GBP/EUR falls to low of 1.1099
  • Euro loses ground to dollar after stronger US GDP data
  • Euro-zone inflation edges higher

 

Current Spot Rates (9.15am)

 

 

 

 

 

 

 

 

 

 

 

 

 

USD

EUR

AUD

CAD

JPY

SEK

ZAR

GBP

1.5147

1.1099

1.6842

1.5901

135.176

10.81

11.58

USD

 

1.3642

1.1119

1.0499

89.242

7.13

7.65

 

 

 

 

 

 

 

 

 

 

Sterling

 

Sterling fell against the dollar and euro on Friday after better-than-expected fourth quarter GDP data failed to offset persistent worries over the health of the UK economy.

 

The pound initially rose after the Office for National Statistics said economic output grew more than forecast in the final three months of 2009 but turned down as traders focused on a downward revision to the estimate for year-on-year growth.

 

The ONS revised its estimate of fourth-quarter GDP to 0.3 percent from an initial 0.1 percent.

However, it revised its estimate of the year-on-year contraction to 3.3 percent from 3.2 percent.

Despite strong denials from Germany that they have agreed to bail out Greece the general consensus that eventually a bailout for Greece will be finalised.

With Greece becoming old news the spotlight is now on sterling which is falling sharply trading as low as 1.1112 this morning. The possibility of a hung parliament is also pressurizing the pound and pushing it lower.

 

Dollar

 

The Greenback gained strength and rose moderately across the board after better-than-expected data on US GDP. EUR/USD fell to test a support zone around 1.3550. GBP/USD is trading at fresh 9-month low below 1.5200.

 

Also against currencies tied to commodities the Dollar rose but is still far from daily highs.

USD/CAD rose to test the 1.0600 zone. AUD/USD fell below 0.8900. The rally of the Dollar across the board was moderate on Friday.

 

The Yen also gained ground across the board and rose after GDP data, even against the Dollar.

USD/JPY retreat after finding resistance at 89.25 and currently trades below 89.10.

 

Euro

 

The euro lost ground against the dollar on Friday after preliminary data showed the U.S. economy grew 5.9 percent in the fourth quarter, slightly higher than the government's first estimate.

 

Final data out on Friday showed the euro-zone's inflation rate inched up to an 11-month high in

January, but should still leave the European Central Bank plenty of room to keep interest rates at very low levels to support the economic recovery.

 

Inflation accelerated to 1% on a year-to-year basis in January from 0.9% in December largely due to a jump in energy prices, the European Union's Eurostat agency said.

However, the headline rate, which was in line with the preliminary reading and the market consensus estimate from a Dow Jones Newswires survey, remains well below the ECB's medium-term target of just below 2%.

 

On a monthly basis, the consumer price index dropped 0.8% in January, the sharpest fall since January last year and slightly more than the 0.7% fall expected by economists. Euro-zone consumer prices rose 0.3% month-to-month in December