The Dollar declined against the Pound while making small gains against the Euro despite disappointing consumer confidence data. US consumer confidence came out less than expected, at a mere 46.0 after a rise of 56.5 in the previous month and 55.0 forecasted. Still ahead, new home sales, durable goods, and jobless claims data are scheduled to be released later this week, with forecasts to be favourable. New homes sales is forecasted to increase from the previous 342k to 353k (-7.6 percent last month to 3.1% this month), while durable goods data is expected to increase1.5 percent compared to the 1 percent increase from the previous month. Despite yesterday’s setback on US consumer confidence, the greenback is holding up well due an unexpected decrease in Europe’s business confidence data. With mounting crises issue coming from the Eurozone, the US dollar will remain steady due to its safe-haven status.

The Euro declined against the Pound and the Dollar after a report showed an unexpected decline in German business confidence, the first decline in 11 months. IFO business climate index indicated a fall to 95.2 from 95.8, with a forecast of 96.1 in January. The index reached a 26 year low of 82.2 last March. With sustaining manufacturing activity in Germany, IFO report was forecasted to improve. The continue disappointing data from the Eurozone has lead market participants to be more risk cautious.

This morning’s rates

GBP/EUR 1.1402

GBP/USD 1.5432

EUR/USD 1.3530

Data released 24^th February 2010

UK:     09:30              BoE MPC board panel discussion

EU:     10.00              EU Ind. new orders

US:     15:00              New Home Sales

The Dollar declined against the Pound while remaining relatively unchanged against the Euro as a disappointing Dallas Fed Manufacturing  report (-0.1% in Feb. vs. 10.0% exp.), coupled with gains in US equities  and other global stock markets, have damped demand for lower-yielding assets such as the US Dollar. All eyes will be closely attuned to the two key Fed commentaries this week: The first will be SF Fed President Yellen’s perspective on the economy; the second will be Fed Chairman Bernanke’s testimony to Congress on 2/24 regarding the recent decision to increase their Discount Rate.

The Euro declined slightly against the Pound while remaining relatively unchanged against the Dollar following news that Germany is preparing plans for Eurozone nations to assist Greece. The single currency fell to 9-month low after the Fed’s surprise move raising its discount rate. Earlier in the week, the euro had managed to stabilize as market jitters over a potential Greece debt default were soothed as E-16 nations pledged support. News that the Region’s PMI was above forecast at 53.7 in February also provided some relief to the euro, but the currency remains overshadowed by signs that the US economy is on firmer footing.

Data released 23^rd February 2010

UK:     09:30 BBA Mortgage Approvals

UK:     11:00  CBI Distributive Trades

US:     14:00  S&P Case-Shiller Home Price

US:     15:00 Consumer confidence

The Dollar declined against the Euro and the Pound as equities and commodities traded higher. With limited economic data out, the market is increasingly trading on the strength of equities. Also to note all eyes will be on Chairman Bernanke is scheduled to speak in front of the House of Senate today, which will provide further market guidance for the Dollar.

The Euro made gains against the Pound and the Dollar on speculation that Greece’s budget deficit will receive aid from European authorities. President, Jean Claude Trichet’s expected attendance of the European Union summit suggests that the meeting will further address Greece’s rising deficit issues. A concrete bailout solution along with firm policy actions will likely boost the euro further against the Pound and the Dollar.  However, if the EU summit fails to come up with a solid plan of action, continuing decline of the euro may be expected. Also to note better-than-expected German Trade Balance data further aided the Euro.

Data released 10^th February 2010

UK      09.30 Industrial Production (December)

Manufacturing Production

UK      10.30 BoE Quarterly Inflation Report

US      13.30 International Trade Balance (December)

UK      15.00 NIESR GDP Estimate (3 Mths to January)

US      19.00 Federal Budget (January)

European stocks had a nightmare day yesterday amid concerns that Portugal, Spain and Greece will face great difficulty in lowering their budget deficits.

The ECB kept rates on hold at 1% and also said that he was confident that Greece can get its budget deficit under control.

“We expect and we are confident that the Greek government will take all the decisions that will permit them to reach that goal” of cutting the deficit below the European Union’s limit, Trichet said at a press conference in Frankfurt today. He said the ECB’s interest rate is “appropriate.”

His comments are slightly different from those he made on January 14^th when he stated that Greece couldn’t expect any special treatment from the EU.

Yesterday’s rates

GBP/EUR 1.1470 – 1.14201

GBP/USD 1.5916 – 1.5732

EUR/USD 1.3902 – 1.3728

Data released 5^th Feb

JPN: 05.00 Leading Indicators (December)

- Coincident Indicator (December)

ITL: 10.00 CPI (January)

GER: 11.00 Industrial Production (December)

US: 13.30 Non-Farm Payrolls (January) – Average Earnings – Unemployment Rate

US: 20.00 Consumer Credit (December)

The Office for National Statistics said yesterday that the public sector posted a net cash requirement of 23.60 billion pounds last month.

The rate of borrowing to businesses rose in November and this is the first increase since January 2009.Bank of England data also showed on Thursday, indicating credit conditions may be starting to stabilise.

Lending was down 7.6 percent on the year however, matching October’s reading which was the biggest annual fall since records began in 1999 and data from major UK lenders in the UK also showed that net lending actually weakened in December.

In the Eurozone, preliminary manufacturing PMI for January increased from 51.6 in December to 52.0. This is in line with market forecasts.

A result over 50 is considered positive for the sector while a result under 50 is considered negative.

In the US, new orders and business indexes have continued growing but at a slower pace at a slower pace than in December.

The World Bank said in its latest economic statement that the global economy would be likely to remain in recession throughout 2010 and predicted that global growth would be around 2.7%. According to the IMF , any global growth under 3% is equivalent to a recession.

The World Bank also stated that a 2.2% drop in global GDP, which is the rate of growth this year, would not be sufficient to cut the gap in output which has arisen because of the global recession.

Yesterdays exchange rates

GBP/EUR 1.1482 – 1.1551

GBP/USD 1.6127 – 1.6309

EUR/USD 1.4030 – 1.4135

This morning’s rates

GBP/EUR 1.1501

GBP/USD 1.6253

EUR/USD 1.4131

Economic releases

UK      : 09.30 Retail Sales (December)

EU-16 : 10.00 Industrial Orders (November)

The core CPI, which excludes energy and other goods with volatile prices, grew 2.8% in annual terms, up from 1.9% in the previous month. The market had predicted a climb to 2.3%.
The UK’s retail price index for December increased 2.4%, up from 0.3% in November and bettering markets expectations of a rise of 2.2%, and this increase is the highest in 21 years.

These figures have added to hopes of a continued economic recovery.

In Europe, expectations for the German economy have fallen for the fourth month in a row.

According to the economic research institute , ZEW , the economic expectations fell from 47.2 points to 57.7 in December. This was much lower than economists had forecast and was the lowest reading since July.

The survey would suggest that the German economy is struggling to maintain the momentum it regained in the second and third quarters of last year and this will put pressure on the Euro.

Consumer demand is down, unemployment is up , wages are down thanks to reduced hours and all in all the outlook is not too healthy.

ZEW noted a “considerable” improvement in the outlook for the country’s vital engineering sector, but said it expects the automobile sector and consumption both to weaken in the next six months.

Although the car sector saw growth last year this was mainly down to government stimulus of €5 billion for scrapping older vehicles. As the stimulus has now finished, auto sales are predicted to fall.

Quote of the day?  “The way out of the recession is burdensome and long,” ZEW President Wolfgang Franz who is also chairman of the government’s council of economic experts.
In the US , the consumer comfort index shed two points to -49 in the week ended Jan. 17. The index is now at its lowest level since Nov. 1, 2009. According to an ABC poll , confidence fell last week.

Yesterday’s rates

GBP/EUR 1.1354 – 1.1474

GBP/USD 1.6314 – 1.6456

EUR/USD 1.4253 – 1.4413

This morning’s rates

GBP/EUR 1.1456

GBP/USD 1.6267

EUR/USD 1.4197

Economic data 20^th January

GER         : 07.00 PPI (December)

ITL           : 09.00 Industrial Orders (November)

UK           : 09.30 BoE Minutes of 6th/7th January MPC Meeting

UK           : 09.30 Average Earnings (3 Mths to November)

UK           : 09.30 Claimant Count Unemployment (December)

- ILO Unemployment Rate (November)

US           : 13.30 Housing Starts (December)

US           : 13.30 PPI (December)

- Ex Food & Energy

The Euro remained relatively unchanged against the Dollar while declining against the Pound as European finance ministers prepared to discuss Greece’s debt problems. The head of the grouping of finance ministers from the euro zone’s 16 members Monday backed French President Nicholas Sarkozy’s claim that the global foreign exchange system is in a state of “disorder.”

This morning’s exchange rates

GBP/EUR 1.1436

GBP/USD 1.6443

EUR/USD 1.4374

Data released 19^th January

UK      09.30 CPI (December)

RPI

US      14.00 TICs Net Capital Inflows (November)

US      18.00 NAHB House Builders Sentiment (January)

The Dollar made considerable gains against the Euro and the Pound on Friday following a plethora of economic data. CPI and the core CPI have both increased 0.1% in December, and Industrial Production rose 0.6% in December, while Capacity utilization rose 0.5% to 72%.

Also to note US consumers are still seeming hesitant about the economic health of their country, according to the University of Michigan index.

The Euro declined against the Dollar and the Pound on Friday following mixed economic data. Consumer price index came in showing inflation has reached a 10-month year-over-year high at 0.9% which was per expectation, while the trade surplus fell beyond expectations to €4.8B.

The Euro-Zone’s consumer price index grew 0.3% in December, up from 0.1% in November. In annual terms, prices increased by the aforementioned 0.9% above the 0.5% registered the previous month. Both of these figures for December were in line with forecasts.

Events in Greece are also hindering the Euro.

This morning’s rates

GBP/EUR 1.1315 – 1.1369

GBP/USD 1.6240 – 1.6351

EUR/USD 1.4335 – 1.4392

Data released 19^th January

No Significant data

It did say however that the services sector was still in decline and that it was a very close call.

Services companies have reported that domestic sales fell at the end of last year even faster than they did in the third quarter, offsetting a pick-up in the manufacturing sector.

Services make up more than two thirds of British GDP, and a surprise fall in third-quarter services output was a major reason why overall GDP continued to shrink then and Britain did not exit recession as economists had expected.

Most analysts are thought to believe that official data will show that the UK emerged from recession at the end of last year and that the actions taken by the government and BoE kick started growth.

The UK economy also received good news regarding the trade balance which fell beyond market expectation and housing prices also grew for the first time since April 2008.

In the US, the trade deficit increased to $36.04 billion in November and this was greater than was expected

Germany showed a decline in the engineering sector and as this is the backbone of Europe’s largest economy it isn’t particularly good news.

However, new orders in November were down only 12% from a year earlier, compared with a 29% drop year-on-year in October.

Domestic orders were down 8% from a year earlier, while export orders were down 12%.

Yesterday’s highs and lows

GBP/EUR 1.1079 – 1.1155

GBP/USD 1.6064 – 1.6174

EUR/USD 1.44454 – 1.4530

This morning’s exchange rates

GBP/EUR 1.1190

GBP/USD 1.6217

EUR/USD 1.4489

Economic releases 13^th January

FRA          : 07.45 Final HICP (December)

GER          : 08.00 GDP (2009) 2008:

ITL            : 09.00 Industrial Production (November)

UK            : 09.30 Industrial Production (November)

EU-16       : 10.00 Industrial Production (November)

UK            : 15.00 NIESR GDP Estimate (3 Mths to December)

US            : 19.00 Federal Budget (December)

JPN         : 23.50 Domestic Wholesale Prices (December)

JPN          : 23.50 Core Machinery Orders (November)

In the Euro-zone , annual inflation increased to a 10 month high of 0.9% in December , up 0.4% from previous month. It does however remain below the ECB’s target.

In the US , pending home sales fell by 16% during November.
However housing sales grew by 15.5% over the year.

In the UK , consumer confidence is muted after the Xmas period.

The VAT increase as well as other tax increases will more than likely have a negative impact on confidence and consumers are expected to ‘ tighten their belts’

On the plus side , figures have shown that permanent job placements in the UK have increased at the fastest pace in 2 ½ years in December and salaries rose for the second month running.

Yesterday’s lows and highs

GBP/EUR LOW 1.1096 HIGH 1.1175

GBP/USD LOW 1.5961 HIGH 1.6152

EUR/USD LOW 1.4348 HIGH 1.4483

This morning’s prices

GBP/EUR 1.1173

GBP/USD 1.6041

EUR/USD 1.4355

Economic data releases 6^th January

UK             : 00.01: Nationwide Consumer Confidence (Dec)

EU-16        : 08.58 Market Services PMI (December)

- Composite PMI

UK             : 09.28 CIPS Services PMI (December)

EU-16        : 10.00 PPI (November)

US             : 13.15 ADP Employment (December)

US             : 15.00 ISM Non Manuf. / Business Activity (Dec)

US             : 19.00 FOMC Publishes Minutes of 15/16th December Meeting