FX Market Overview

I had trouble this morning explaining to my 5 year old son why Santa and his elves were beaten up at his grotto in Lapland yesterday. The grotto was a tent in a muddy paddock in the New Forest where parents paid £30 for the privilege of sitting on Santa’s lap. Bogans live everywhere son, even in Lapland.
Pressure builds on the Speaker of the House Michael Martin after police arrest of Conservative MP Damien Green. Martin’s days are numbered after he failed to perform his duty to defend the rights and liberties of MPs against the Crown and Prime Ministers Office. I must admit I won’t miss his rather annoying “order” “order” “order” calls at Prime Ministers Question Time.
We have had a number of Eurozone economic releases this morning but I can summarise these in one word without boring you with the details - poor. It seems every number which hits our headlines these days is “the worst on record”, “the biggest contraction in a decade” or “indicative of a deeper more protracted recession”.
Asian stock markets rallied overnight but these gains have more or less been wiped-out by the poor Eurozone service sector reports mentioned above. The resumption of the stock market decline should benefit the US dollar as investors continue to prefer the safety of US treasury bonds.
The pound has become the markets whipping boy again this morning and has fallen 5 cents against the dollar from yesterdays high. I would expect to see a test of $1.45 and below this week and €1.15 against the euro unless we see something spectacular from either the Bank of England (BOE) or European Central Bank (ECB) tomorrow. A lifeline could be extended for GBPEUR if the ECB cut rates by more than 0.5% which I suspect they will - look for as much 1% from the ECB to match the 1% we suspect the BOE will cut by.
There are four important US figures due for release between 13.15pm and 15.00pm this afternoon for the market to concentrate on. These numbers will give us a preview into the state of US employment, labour costs, productivity and the service sector.
Well done to Burnley Football Club who knocked over another big Premiership side Arsenal last night to reach the semi-finals of the Carling Cup.