Good morning and welcome to today’s foreign exchange market commentary on 13th of May.
Here are MyCurrencyTransfer.com’s top 5 currency highlights:
- GBP threatened by Co-op downgrade
- Eurozone meet in Brussels today
- USD makes steady advances ahead of April data
- Stable risk appetite in Asian markets pushes down Yen further
- AUD buckles after Swan’s comments
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1839
GBP/USD – 1.5365
GBP/CHF – 1.4692
GBP/CAD – 1.5538
GBP/AUD – 1.5415
GBP/ZAR – 14.0037
GBP/JPY – 156.1973
GBP/HKD – 11.9253
GBP/NZD – 1.8547
GBP/SEK – 10.1351
Mid-market rates as of 2013-05-13 10:21 UTC
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Key releases in the next 24 hours that may affect currency date:
Australia: No Data
Europe: EUR Euro Zone Finance Ministers Meet in Brussels
United Kingdom: GBP RICS House Price Balance (APR)
New Zealand: NZD Retail Sales Ex Inflation (QoQ) (1Q)
United States of America: USD Advance Retail Sales (APR), USD Retail Sales Less Autos (APR), USD Business Inventories (MAR)
China: No Data
Canada: No Data
Japan: No Data
GBP threatened by Co-op downgrade
The latest batch of trade data released by UK indicated no change in the position of its trade balances. UK current account deficits have deteriorated suggesting GBP’s long-term equilibrium position is not as high as initially expected. UK manufacturing sector’s poor performance is also indicative of this position. Decline in levels of productivity is not a product of economic cycles rather it is a structural issue. The GBP in such a case will have to decline to improve the UK’s competitiveness amongst its peers.
Meanwhile, Britain’s retail banking sector received some unfortunate news earlier today when Moody’s- leading credit ratings agency downgraded UK based Co-Op Bank’s debt rating to junk status. This event brought the issue of funding difficulties to light which caused a run on Northern Rock- another UK based firm, post financial crisis of 2008. The GBP has however managed to hold up against most of its peers today in spite of the negative sentiment from home – the GBP/EUR was trading at above the 1.1800 level for the whole of today’s session.
Eurozone meet in Brussels today
Eurozone finance ministers will gather in Brussels today to discuss whether Greece should be granted further bailout payments. The meeting is also expected to bring up the issue of progress towards creating the EU’s banking union. EU officials are expected to decide whether to make the first installment payment towards the aid for Cyprus, which amount to 3 billion euros following which decisions will be made on whether Greece should receive the next tranche of its bailout programme, which amounts to 7.5 billion euros.
The week also opens with further concerns about Slovenia requiring a bailout as well. However the country’s government has announced a comprehensive reform plan last Thursday which will aim to consolidate its finances in order to for it to avoid requiring a bailout.
USD makes steady advances ahead of April data
USD continued its advance against all major currencies last week. This week data to look out for include US April retail sales data, initial jobless claims and April CPI. Looking at the emerging positive trend for US economic data over the past week this week too will see the USD rising steadily.
Stable risk appetite in Asian markets pushes down Yen further
Yen continued to sink in the Asian session by 0.6 percent on average against its peers, as risk appetite strengthened across Asian markets and encouraged Japanese capital outflows. The benchmark USD/JPY pair continued to rise, and served to boost expectations for a tapering of Federal Reserve economic stimulus initiatives in the medium to short term.
AUD buckles after Swan’s comments
AUD failed to perform in the Asian session earlier on after as Treasurer Wayne Swan warned that the AUD’s strength has amounted to an “unprecedented whack” to revenue and led to the government’s “big decision to delay its return to surplus.” Once again more disappointing Chinese economic data succeeded in increasing downward pressure on the AUD. The currency slid as much as 0.4 percent earlier on against its leading counterparts.