Foreign Exchange Daily Market Commentary – UKForex – 07/12/2010

Foreign Exchange Daily Market Commentary – UKForex – 07/12/2010

:: United States Dollar: GBP/USD has been well bid over the last 24 hours rising slowly throughout most of yesterday and overnight. It opens this morning at 1.5760 after starting the day yesterday at 1.5680. Increased risk demand has driven the USD slightly lower over the last 24 hours, this coming off of the back of some positive comments out of Europe (more on this in the Euro wrap) and a belated reaction to weak US NFP data on Friday. Recent indications by the Fed too that they will not rule out further QE in the future is also weighing on the greenback at present. No economic data has so far been released out of the UK this week; the first set is due this morning by way of manufacturing and industrial production data. Despite this European debt news is still likely to drive risk demand near term and therefore likely to influence GBP/USD over the day and week.

– We expect a range today in the GBP/USD rate of 1.5690 to 1.5860

:: Euro: EUR/USD is up this morning and trades at 1.3370 currently. A report by Medley Global Advisors, a macro policy intelligence service, stated that action by the European Central Bank had bought some time for European governments to come up with a plan which might include a funding program for Portugal and an increased and larger credit line for Spain. This has supported the Euro overnight. EUR/USD traders are a little cautious this morning however as they and the rest of financial markets awaits news from the upcoming Ecofin meeting today. Concerns linger on over the possible spread of contagion which was supposed to be contained by the recent Irish bailout and this will of course be the theme running through the meeting. We expect to hear news on this throughout the day. GBP/EUR has traded a narrow range over the last 24 hours and opens 20 points higher than this time yesterday at 1.1810.

– We expect a range today in the GBP/EUR rate of 1.1780 to 1.1840

:: Aussie and Kiwi Dollars: AUD/USD pushed through the .9900 figure overnight and opens at .9925. It and NZD/USD have tracked the Euro higher. NZD/USD opens at .7625. In other news and as expected the Reserve Bank of Australia decided to leave interest rates on hold overnight at 4.75%. The accompanying statement and previous comments indicate that the RBA might not hike until mid next year. It briefly knocked AUD/USD although the damage did not last as EUR/USD ticked higher. GBP/AUD and GBP/NZD are steady and opens at 1.5880 and 2.0635 respectively.

– We expect a range today in the GBP/AUD rate of 1.5790 to 1.5940

– We expect a range today in the GBP/NZD rate of 2.0580 to 2.0740


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