United States Dollar: The dollar continues to strengthen on the back of an increase in risk aversion. There were a number of mixed economic releases out from the US yesterday driving short term volatility. Unemployment claims came in lower than expected, adding to short term positivity regarding jobs, but other figures such as durable goods orders and new home sales came in worse than forecast, overshadowing any improvement in sentiment. GBP/USD dropped from levels around 1.5830 to a low of 1.5740 before recovering to levels back above 1.5800. We open slightly weaker this morning at 1.5790. Today should be relatively calm given the US Thanksgiving holiday. In the UK we have a few talks from Bank of England officials around midday.
– We expect a range today in the GBP/USD rate of 1.5730 to 1.5850
Euro: The Eurozone debt worry issue seems to be getting worse, with Germany not helping matters. An article in Frankfurter Allgemeine, a German newspaper, cited a confidential report from the finance ministry, which alludes to the government aiming to impose haircuts on creditors sooner than expected. Spreads on Spanish and Portuguese debt continued to widen, highlighting the growing concern over their ability to service debt. Spain’s finance minister Elena Salgado stated that there was an “abyss” separating Spain from Ireland and Greece, attempting to calm speculative selling of Spanish government debt. The Euro suffered as a result of these ongoing worries with EUR/USD falling further to levels around 1.3320.
– We expect a range today in the GBP/EUR rate of 1.1780 to 1.1900
Aussie and Kiwi Dollars: “With risk aversion very much the trade of choice at the moment, the Aussie and Kiwi continue to remain under pressure. There was a small push up to levels above 0.9800 and 0.7640 respectively, but continued worries regarding Chinese inflationary pressure and subsequent monetary policy expectations kept momentum subdued. Private capital expenditure figures came in stronger than expected in Australia, but other news contained any optimism. RBA governor Stevens speaks late this evening. ”
– We expect a range today in the GBP/AUD rate of 1.6000 to 1.6200
– We expect a range today in the GBP/NZD rate of 2.0610 to 2.0810