Good morning and welcome to today’s foreign exchange market commentary on Tuesday, the 6th of March.
The so-called Private Sector Initiative over Greek debt-swap should be over by Thursday night. There has been some confirmation over the level of participation after comments came in from the lenders lobby group, the Institute of International Finance, over the weekend that a bond swap is possible this week.
Greece is negotiating the lenders, mainly hedge funds, banks and insurers, for a €100 billion write down of its private sector debts, before the second round of bailout money is released. Finance Minister Evangelos Venizelos clarified that this is the best the country could offer and warned the country could activate Collective Action Clauses (to enforce losses) if required.
The latest move is being seen as an attempt to build up the momentum before the Thursday deadline, though Athens is expected to enforce CAC to coerce those who refuse accept the losses on their bonds.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.2004
GBP/US$ – 1.5839
GBP/CHF – 1.4482
GBP/CAN$ – 1.5782
GBP/AUS$ – 1.4914
GBP/ZAR – 12.0568
GBP/JPY – 128.31
GBP/HKD – 12.2982
GBP/NZD – 1.9401
GBP/SEK – 10.6312
EUR: The single currency weakened against the dollar yesterday after eurozone services PMI reading showed decline for Feb. after briefly growing Jan. The actual figure came in at 48, indicating contraction. Consumer confidence fell 2.8 short of forecasts. However, the European retail sales number provided some relief as trends reversed after recording contraction for four consecutive months. The EUR/USD pair touched a high of 1.3235 on Monday though it failed to hold on to the gains and are trading around 1.3178 now. The cable has been range-bound against the euro yesterday and is sitting at 1.1983 this morning.
USD: The US economic indicators remain robust indicating a slow but steady recovery. The GBP/USD pair hit a intraday high of 1.5880 yesterday after US non-manufacturing data expanded for the 26th month in a row and factory orders declined at a slower rate than expected. The gain was supported further after a RBS report suggested that the Monetary Policy Committee members may vote for a rate hike by Aug 2012. However, the GBP/USD pair weakened overnight and opens at 1.5822 this morning.