Foreign Exchange Daily Market Commentary – UKForex – 06/10/2010

Foreign Exchange Daily Market Commentary – UKForex – 06/10/2010

United States Dollar: Risk is well and truly back on. This is in part a reaction to a good US data release yesterday by way of ISM non-manufacturing PMI. It showed that business for service companies in the US picked up by more than expected during September. Global stock prices have performed well as markets are happy to invest in risk. The Nikkei and Dow finished up 1.81% and 1.80% respectively and the FTSE finished 0.71% up yesterday. With risk on markets are shunning the greenback and it has weakened yet further against the majors over the last 24 hours. GBP/USD pushed through 1.5900 to a high of 1.5935, supported too by better than expected UK services PMI figures. It has slipped back slightly this morning and trades at 1.5895, but as the USD continues to weaken it seems it may only be a matter of time before cable hits 1.6000 again. US non-farm payrolls data will be the next focus, due on Friday.

– We expect a range today in the GBP/USD rate of 1.5840 to 1.5960

Euro: EUR/USD is also ticking higher this morning, buoyed by good risk appetite. This comes despite news yesterday that Moody”s the ratings agency was on the verge of downgrading Irish sovereign debt again. Its bad news that markets are used to now, and a lot of this is priced in to the value of the single currency currently. Meanwhile European wide services PMI data, released yesterday and which was better than expected has helped to support the Euro. EUR/USD has pushed through 1.3800 and opens this morning at 1.3850. With risk on EUR/GBP has been well bid again over the last 24 hours. GBP/EUR is back under 1.1500 and trades at 1.1470 currently.

– We expect a range today in the GBP/EUR rate of 1.1440 to 1.1520

Aussie and Kiwi Dollars: After falling under .9600 following the RBA surprise decision on Tuesday to leave the central bank interest rate on hold AUD/USD has recovered overnight. This comes despite a very quiet day data wise in Australia. The currency has simply reacted to global risk demand which is currently positive. AUD/USD is now back above .9700 and trades at .9750 at the moment. Markets locally are now awaiting the release of Australian employment data, and the chatter of parity with the USD has returned. NZD/USD is up for the same reasons this morning, having broken through .7500 early this morning. It sits at .7505 currently. GBP/AUD and GBP/NZD have both fallen as a result. GBP/AUD is down from 1.6550 and sits at 1.6300 currently whilst GBP/NZD trades at 2.1180.

– We expect a range today in the GBP/AUD rate of 1.6240 to 1.6360

– We expect a range today in the GBP/NZD rate of 2.1080 to 2.1240

Data Releases:

  • AUD: Employment Change, Unemployment Rate
  • EUR: Final GDP, German Factory Orders
  • GBP: No data due for release today
  • NZD: No data due for release today
  • USD: ADP non-farm employment change

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