United States Dollar: GBP/USD pushed through 1.5900 yesterday morning and traded to a high of 1.5906. This followed on from the previous session when USD was heavily offered throughout the Asian session. The tide soon turned for cable however as the greenback clawed some gains back during late morning. This came as US treasury yields continued to move higher, in turn strengthening demand for the currency. US retail sales also beat expectations which helped to fuel this demand. The data showed that sales rose 0.8% in November. Meanwhile UK CPI data came in stronger than expected yesterday, rising to a six month high in November of 3.3% from a year earlier. This will be a concern again to the Bank of England who has faced the dilemma of rising prices and low economic growth/prospects for the last two years or so. The figure weighed on the pound throughout much of the morning yesterday. Later on in the evening the Fed delivered few surprises as it announced its monetary policy plans. The statement was cautious on growth prospects but said that expansion was continuing. They also put emphasis on the high US unemployment rate and have stuck to the planned $600 billion bond purchase program. GBP/USD has continued to drift lower in Asia and opens this morning at 1.5740, this after falling to a low of 1.5715 overnight.
– We expect a range today in the GBP/USD rate of 1.5700 to 1.5840
Euro: EUR/USD has also fallen in the last 24 hours. After coming close to breaking back through 1.3500 early yesterday morning it now opens at 1.3310. This was all to do with USD strength and owing to better bid US yields. The positive German ZEW Economic Sentiment survey was largely ignored, the data showing that the outlook improved in December to 3.9 from 1.8 in November. More recently though Moody’s, the ratings agency, has stated that it has put Spain on review for a possible downgrade. The Euro has fallen this morning as a result and was dragged sub 1.3300 immediately following the announcement. Standard and Poors, another ratings agency, has also threatened to downgrade Belgium due to political uncertainty which is also weighing on the single currency so far today. This has meant that GBP/EUR has recovered off of yesterdays low of 1.1772. It currently trades at 1.1815.
– We expect a range today in the GBP/EUR rate of 1.1760 to 1.1840
Aussie and Kiwi Dollars: AUD/USD briefly traded higher through parity yesterday morning as the USD fell following the ratings agency warning earlier in the week. The USD has turned in the last 24 hours however and has advanced against both NZD and AUD. AUD/USD opens up in London at .9925 whilst NZD/USD has fallen from .7570 to .7485 in the last 24 hours. There has been no Australian or New Zealand data of note released overnight. These moves have been driven purely by the USD and volatile US treasury yields. Both GBP/AUD and GBP/NZD open at similar levels to yesterday morning at 1.5855 and 2.1015 respectively.
– We expect a range today in the GBP/AUD rate of 1.5780 to 1.5940
– We expect a range today in the GBP/NZD rate of 2.0960 to 2.1160